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July 23, 2009

News Digest

STRATEGYKARVY sets up Indian wealth ventureKARVY, a top-five Indian stockbroker with around 60 million customers, has set up a wealth management unit targeting high net worth individuals It is aiming to leverage its network of 575 offices, including retail stockbroking branches in India, to clients with more than INR2.5 million ($52,000), more generally considered the affluent segment.We strongly believe there is lack of high-quality advice in this segment, said C Parthasarathy, chairman of KARVY Group.After having worked hard and taken risk to create wealth, the Indian HNWI investor expects a minimum return at acceptable risk levels irrespective of market conditions.Over the years, KARVY has graduated from pure product selling to concept and advice-based selling We acknowledge that offering advice to HNW customers requires deep understanding of the nuances of the financial markets in India as well as dynamics of global markets.The service will initially be offered in Indias main wealth centres: Mumbai, Delhi, Hyderabad, Bangalore, Chennai, Kolkata, Pune and Goa.Hrishikesh Parandekar is CEO of the new business

By Verdict Staff

STRATEGY

KARVY sets up Indian wealth venture

KARVY, a top-five Indian stockbroker with around 60 million customers, has set up a wealth management unit targeting high net worth individuals. It is aiming to leverage its network of 575 offices, including retail stockbroking branches in India, to clients with more than INR2.5 million ($52,000), more generally considered the affluent segment.

“We strongly believe there is lack of high-quality advice in this segment,” said C Parthasarathy, chairman of KARVY Group.

“After having worked hard and taken risk to create wealth, the Indian HNWI investor expects a minimum return at acceptable risk levels irrespective of market conditions.”

“Over the years, KARVY has graduated from pure product selling to concept and advice-based selling. We acknowledge that offering advice to HNW customers requires deep understanding of the nuances of the financial markets in India as well as dynamics of global markets.”

The service will initially be offered in India’s main wealth centres: Mumbai, Delhi, Hyderabad, Bangalore, Chennai, Kolkata, Pune and Goa.

Hrishikesh Parandekar is CEO of the new business. He was previously at Morgan Stanley Private Wealth Management, where he headed its Latin American and international retail businesses.

 

DISTRIBUTION

CMB looks to expand branch footprint

China Merchants Bank is expanding its domestic distribution network with the opening of at least five new wealth management branches this year.

The bank, one of the emerging leaders in the Chinese wealth industry, already has eight high-end branches. But, with around 500 branches in total, it does not have access to the massive retail banking branch networks of some of rivals, ICBC, Bank of Communications and China Construction Bank.

It does offer the widest product offering of any Chinese private bank and has recently upgraded its internet offering.

The bank is also developing a reputation for innovation, launching an art banking product to tap into increasing interest among Chinese investors for a cultural element to investments.

CMB’s branch expansion follows a similar move by Bank of Communications in June, which said it would expand its private banking business into Jiangsu, Hubei, Shanxi and Qingdao.

Chinese wealth is expected to double between 2007 and 2014, as it did in 2000-2007 (see PBI 249).

 

RESULTS

Clients still pulling assets from UBS

UBS continued to haemorrhage client money in the second quarter, with outflows at all three of its wealth divisions and the asset management unit.

The bank’s troubles have seen its invested assets slip from CHF2.3 trillion ($2.1 trillion) at the end of 2007 to CHF1.53 trillion at the end of the first quarter. A trading statement issued by the Swiss bank said it would register another loss in the second three months of the year, its seventh loss in eight quarters. It prompted the bank to announce plans to raise CHF3.8 billion in equity through a rights issue.

Oswald Grübel, appointed chief executive of the business earlier this year, is committed to cutting 11 percent, or 8,700, of his workforce to return the bank to profitability.

 

STRATEGY

Credit Suisse sets ambitious Japan target

Credit Suisse, which launched private banking services in Japan in December 2008, aims to have several hundred private banking staff in the country by 2014.

The business, headed by Junya Tani, currently has 40 staff and is aiming for rapid expansion in the world’s second largest wealth market. The unit caters for clients with over $10 million in financial assets and has already attracted “a few” clients worth more than $1 billion, according a Bloomberg report.

Credit Suisse, which has been launching private banking in onshore locations where it already has asset management and investment banking businesses, has also opened units recently in Mexico and Ukraine.

HSBC and UBS have recently set up private banking operations in the country, while Barclays is looking at a joint venture with domestic bank Sumitomo Mitsui. Foreign banks in particular have been attracted by the relaxing of ‘firewall’ regulations which restrict their ability to offer client services across different departments of the bank.

 

STRATEGY

BNP Paribas and Piraeus target Greek clients

BNP Paribas and Piraeus Bank are setting up joint ventures in Greece and Switzerland to help serve the international needs of Greek clients.

The partners said the link-up would create a wealth management specialist, benefiting from the expertise and structures of BNP’s global network and the local presence and retail banking platform of Piraeus in south-eastern Europe.

As well as Greece, Piraeus has a sizeable presence in Romania and Bulgaria. The transaction is expected to close in the final quarter of 2009 and subject to regulatory approval. The Greek market has also attracted interest from Sal Oppenheim, the Luxembourg-based bank, which said it was looking to recruit staff in the country earlier this year.

 

REGULATION

Singapore waters down bank secrecy

The Singapore government has proposed a change in its tax legislation to meet international calls for reform on bank secrecy.

Singapore’s Finance Ministry has entered into a month-long consultation process, which started on 28 June, to seek public feedback on the recommendations. The key legislative changes, designed to fit in with internationally agreed OECD standards, are the ‘lifting of domestic interest’ and extending exchange of information to taxes other than income tax, including goods and services tax, stamp duties and property tax.

The current ‘domestic interest’ law means Singapore only shares information if it already has the information in its records or has the domestic interest to gather the requested information. It is proposing to lift this domestic requirement, meaning information requests that do not refer to Singapore tax matters will also be honoured.

 

CLIENTS

Anti-Coutts ad campaign

Coutts clients who lost millions after investing in AIG bond products have launched an advertising campaign targeting the private bank.

The adverts will run for two weeks and will be placed on banners outside Coutts’ headquarters on the Strand, central London, and escalators at nearby Charing Cross underground station. They will also feature in UK national newspapers.

The advertisements feature cuttings from the business press outlining the demise of AIG in spring 2008, coupled with statements alleged to be from Coutts bankers at the same time advising a client they had “no concern” about the investments.

Keith Mills, the multi-millionaire founder of loyalty schemes AirMiles and Nectar, started the campaign after he learned of huge potential losses on a £65 million investment through Coutts in AIG Life’s Premier Bonds. He has set up the Coutts AIG Action Group in an attempt to receive “fair compensation”.

Coutts denies any wrongdoing.

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