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April 19, 2021updated 26 Jan 2022 3:11pm

Citi’s plan to strengthen its commitment to wealth amidst consumer banking exit will be a challenge

By GlobalData Financial

Citi is closing out its consumer banking operations in 13 markets, but has declared that it plans to “double down” on wealth management in Asia Pacific. Given the lender’s highly reduced footprint this is likely to prove challenging.

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Analyze opportunies within the wealth management market in APAC

GlobalData’s ‘Asia-Pacific Wealth Management: Market Sizing and Opportunities to 2026’ report provides a comprehensive overview of the Asia-Pacific (APAC) wealth management market.
  • The report analyzes the APAC wealth and retail savings and investments markets. This includes affluent market size, both by number of individuals and the value of their liquid assets.
  • The affluent population grew by 5.3% in 2021 and is expected to grow at an AAGR of 4.8% between 2022 and 2026.
  • The value of liquid assets held by the affluent segment surged by 8.4% in 2021, backed by economic recovery. HNW individuals’ financial wealth grew by 12%, while mass affluent individuals’ wealth grew by 6.0%.
  • The report provides an analysis of factors driving liquid asset growth. It is also split into asset classes - equities, mutual funds, deposits, and bonds.
  • The affluent population are more risk-tolerant and invest a significant proportion of their investments in risky assets such as equities, compared to emerging affluent and mass market individuals.
The report also provides data and insights on the size of offshore holding of HNW investors in the APAC region.
by GlobalData
Enter your details here to receive your free Report.

The bank will continue to service larger and institutional clients, but will discontinue its consumer banking business in 13 markets – 10 of which are in Asia. It will continue to operate “wealth centres” in Singapore and Hong Kong.

Both markets are critical wealth hubs in the region, with Singapore serving as a gateway to Southeast Asia and Hong Kong to Greater China, and as such seem a natural choice. And Citi does seem committed to these hubs. At the end of 2020 it opened its largest wealth advisory business in Singapore, and announced that it will hire up to 500 people in Hong Kong to expand its wealth operations.

However, this comes at a time when other players are investing in an onshore presence in the wider region. For example, Goldman Sachs is aggressively growing its asset and wealth business in China. It aims to hire 70 staff in 2021, with plans to double its headcount to 600 by 2024.

HSBC is also busy growing its Asia onshore presence. The bank launched a new private banking business in Thailand in February, and announced it will employ 3,000 bankers in China to target wealthy investors over the next five years.

Between December 2020 and 2025, the number of HNW investors in Asia Pacific is forecast to increase by 48.1%, according to GlobalData. This compares to 40.6% globally, excluding Asia Pacific. Yet competition is becoming increasingly fierce as more providers are eyeing a slice of the pie. Our surveying of the Asian market shows that 64% of industry participants feel that competition from other wealth managers for HNW clients has increased over the past year.

As this is the case, wealth managers will have to up their game to secure share of wallet. Home to highly skilled workforces, competitive tax regimes, and sophisticated financial markets, Singapore and Hong Kong have strong appeal and attract a good chunk of the wider region’s HNW wealth.

But private banking is about personal relationships. Uptake and usage of digital channels is on the rise, but face-to face contact remains critical – especially at the onset of any relationship. Trust has to be built for HNW investors to hand over their fortunes. This gives providers with an onshore presence a clear advantage.

GlobalData research shows that 13% of HNW client acquisitions stem from internal referrals from the retail banking division, and another 11.9% from a relationship manager’s own contacts in Asia Pacific. A local adviser base, something Citi will lack, will prove to be a strong asset in capturing the wealth and the additional 2.1 million Asian individuals that are forecast to qualify as HNW by 2025.

Free Report
img

Analyze opportunies within the wealth management market in APAC

GlobalData’s ‘Asia-Pacific Wealth Management: Market Sizing and Opportunities to 2026’ report provides a comprehensive overview of the Asia-Pacific (APAC) wealth management market.
  • The report analyzes the APAC wealth and retail savings and investments markets. This includes affluent market size, both by number of individuals and the value of their liquid assets.
  • The affluent population grew by 5.3% in 2021 and is expected to grow at an AAGR of 4.8% between 2022 and 2026.
  • The value of liquid assets held by the affluent segment surged by 8.4% in 2021, backed by economic recovery. HNW individuals’ financial wealth grew by 12%, while mass affluent individuals’ wealth grew by 6.0%.
  • The report provides an analysis of factors driving liquid asset growth. It is also split into asset classes - equities, mutual funds, deposits, and bonds.
  • The affluent population are more risk-tolerant and invest a significant proportion of their investments in risky assets such as equities, compared to emerging affluent and mass market individuals.
The report also provides data and insights on the size of offshore holding of HNW investors in the APAC region.
by GlobalData
Enter your details here to receive your free Report.

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