momentum as a dominating Asian wealth centre and may even be
attracting private banking business from an increasingly-expensive
Singapore. Already, hiring of private bankers in Singapore seems to
be slowing as market turmoil makes itself felt.
The resurgence in Hong Kong’s financial services industries is
mainly being seen in investment banking, as big players turn to
Asia for new business as transaction volumes shrink in Western
centres like Wall Street and London in the backwash of the credit
crisis.
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China and the other emerging Asian economies have not been as badly
affected by the credit crunch, meaning that there still plenty of
deal-making opportunities in the region. Big Asian sovereign wealth
funds have plenty of clout to help bankroll acquisitions and other
transactions, bankers point out.
Moving into the region
While Citigroup, Morgan Stanley and other firms have been
relocating senior executives to Hong Kong, Deutsche Bank has made
the strongest commitment, announcing plans to raise its head count
in the city to 4,000 from the current 1,500.
Colin Grassie, CEO Asia Pacific for Deutsche said, “We are
experiencing rapid growth in the region and in Hong Kong in
particular.” Deutsche wealth head Pierre de Weck said that his
private banking expansion in the region would call for 200 more
staff.
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By GlobalDataWithin private banking, the whisper in Asia is that some wealth
managers are quietly moving back to Hong Kong from Singapore
because the costs in the latter are becoming too high, even
compared to expensive Hong Kong.
The one-time British colony has long held claim to being Asia’s
leading wealth management centre in terms of fund management, with
80 fund houses currently operating there, including firms from the
US, Britain and Switzerland.
Perfectly positioned
A big attraction is that fund managers can leverage Hong Kong to
tap the huge domestic savings of China.
But Singapore is considered to have the lead in classic private
clients banking, with some 50 foreign and domestic banks offering
services out of the city-state.
The latest entrant to the Hong Kong funds business is Britain’s
Threadneedle, which manages $125 billion of assets. It has hired
James Campion from Allianz Global Investors as its Hong Kong-based
head of Asian distribution to lead its expansion in the region.
Threadneedle also plans to add a Singapore office in
September.
If a significant shift of the wealth industry to Hong Kong does
take place, this would mark a major coup for the city which has
long competed with Singapore to become centre of choice for private
banks.
What is clear is that even in the expanding wealth management
markets in Asia, the general economic gloom is starting to make
itself felt in Singapore.
Market turmoil
Olivier Denis, head of the private bank of Singapore’s OCBC, has
said that big banks have slowed their drive to hire bankers in
Asia.
While the market turmoil could be a reason for the slowdown in
hiring, he said bankers also realised that clients were reluctant
to move their money from one bank to another too frequently.
“Has the market slowed down in terms of active
recruitments? I think it has, yes,” he said, quoted by Reuters.
“This business is about long-term relationships. If you jump as a
relationship manager every two years, you start from scratch all
over again.”
OCBC was one of the banks most impacted by the job-hopping
merry-go-round in Singapore of recent years. It lost about 3
percent of its private client assets over 2006 and 2007 and almost
a third of its private bankers to foreign banks in this
period.
Still, Singapore is continuing to attract new players.
Liechtenstein private bank VP Bank aims to attract CHF3 billion
($2.9 billion) this year, and more than double the size of its
advisory team to 26 from the present 12 after getting the green
light to launch wealth services in the city.
Meanwhile, Hong Kong has reported a record budget surplus and
unveiled tax cuts and increased spending aimed at bolstering the
economy as a global slowdown spreads.
Financial Secretary John Tsang cut the salaries and company profits
taxes by one percentage point to 15 percent and 16.5 percent
respectively, losing HK$5.36 billion in revenue per year.
Singapore, which reported its biggest budget surplus in at least a
decade earlier this month, announced a package of cash handouts and
rebates to help cushion the effect of inflation, running at the
fastest in 25 years. But the island-nation held off on tax cuts for
workers and companies, unlike Hong Kong.
Singaporean inflation was running at 6.7 percent in March,
reflecting the fact that the island has to import most of its food,
oil and natural resources.
In addition, Singapore has been ranked as the 9th most expensive
location in the world when it comes to renting a three-bedroom
apartment, according to a new international real estate
survey.
The city-state, which is also ranked fifth most expensive in Asia
overall, saw its residential accommodation rental rates for a
three-bedroom apartment increase by more than 30 per cent from 2006
to 2007, a survey by ECA International shows.
A three-bedroom apartment in a popular expatriate area in Singapore
costs approximately US$4,460 per month on average. This is 33 per
cent up on 2006, when the equivalent apartment would have cost
approximately US$3,364 and the highest year to year percentage
increases in Asia.
