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August 19, 2009

News Digest

SEGMENTATIONStanChart expands Priority BankingStandard Chartered, in addition to setting a target to recruit 100 relationship managers in its private banking business, has targeted an 850-strong addition to its mass affluent Priority Banking service.The bank plans to add the new relationship managers over the next 12-18 months, with 430 to be hired in Greater China and 120 in Singapore.StanCharts plan comes after a relaunch of the service, aimed at people with $100,000 in investable assets

By Verdict Staff

SEGMENTATION

StanChart expands Priority Banking

Standard Chartered, in addition to setting a target to recruit 100 relationship managers in its private banking business, has targeted an 850-strong addition to its mass affluent Priority Banking service.

The bank plans to add the new relationship managers over the next 12-18 months, with 430 to be hired in Greater China and 120 in Singapore.

StanChart’s plan comes after a relaunch of the service, aimed at people with $100,000 in investable assets. It has launched advertising campaigns in key markets including Hong Kong, Singapore, India, China, Taiwan, Malaysia, Korea and the UAE.

Competition for affluent clients is hotting up, particularly in the Asia-Pacific region. HSBC Premier remains the benchmark, with 2.6 million customers worldwide and a target of 6 million by 2011. Citi is also competitive in the segment with its Citigold service. Regional Asia-Pacific retail banks have also made inroads, most notably CITIC, through its CITICfirst programme (see Shifting the balance).

 

REGULATION

300 UK banks told to hand over client details

HM Revenue & Customs (HMRC), the UK tax authority, has been given authority to order over 300 banks to give details of customers who hold offshore accounts.

The regulatory body can now issue the information notices to banks ahead of the New Disclosure Opportunity (NDO), which allows people with unpaid taxes to settle their tax liabilities at a favourable penalty rate.

HMRC said it would use the information to ensure individuals were paying appropriate amounts of tax.

Dave Hartnett, the HMRC’s permanent secretary for tax, said there were some taxpayers that regretted not taking advantage of the Offshore Disclosure Facility in 2007, which focused on the customers of five large banks. He urged people with unpaid tax to make a full disclosure during the NDO.

The NDO allows those with undeclared tax liabilities to take a 10 percent penalty on their assets. Those found to have undeclared tax would face a penalty of 30 percent or higher, and also run the risk of prosecution. Clients are being asked to disclose before 10 March 2010.

“It is wrong that some people evade paying their fair share of tax by hiding assets in offshore accounts,” said Stephen Timms, financial secretary to the Treasury.

“Today’s ruling represents real progress in creating a level playing field for all taxpayers.”

 

REGULATION

UBS settles John Doe summons with US

UBS and the US government have reached an agreement to resolve a legal dispute which had called for the bank to release details of 52,000 clients suspected of tax evasion.

Under the agreement, which had not been released when PBI went to press, it was expected the bank would be asked to hand over details of around 5,000 client accounts. If that was the case, it would be seen as a blow to Swiss banking secrecy and could pave the way for more litigation from angry clients.

Others saw it as an opportunity for UBS to recover its reputation and for the Swiss government, which negotiated on its behalf with the US on the issue, to sell its stake in the bank, valued at around 9 percent.

UBS chairman Kaspar Villiger welcomed the agreement.

“The board of directors and management of UBS are grateful the two governments reached this agreement to resolve the issue,” Villiger said.

“We thank the Swiss government and Swiss delegation that negotiated this settlement for their outstanding efforts.”

The bank said it would not comment further on the matter until a formal signing of the agreement.

 

MERGERS and ACQUISITIONS

ANZ, NAB step-up wealth business push

Australia’s domestic retail banks are building their wealth businesses at home and abroad, as they continue to gain ground on struggling international rivals.

This month, National Australia Bank paid $99 million for an 80.1 percent slice of the Goldman Sachs JBWere business in Australia and New Zealand, while ANZ has secured some of Royal Bank of Scotland’s assets in Taiwan, Hong Kong, Singapore and Indonesia.

NAB, Australia’s largest retail bank, said the JBWere business would remain a centre of specialist expertise, focusing on delivering advice-driven wealth solutions to high net worth clients. It had 22,000 active client relationships and funds under management of A$10 billion ($8.2 billion).

ANZ, which is aiming to build a super-regional presence in Asia, did not disclose detailed information on wealth management assets it had acquired. The bank is the second largest private bank in Australia, according to PBI’s Australia survey (see PBI 245), with around $18 billion in assets under management. It paid A$687 million for a mixture of assets including retail, wealth and commercial businesses.

 

STRATEGY

Religare bursts into the spotlight

Religare Macquarie is aiming to hire around 650 staff in India in the next three years as it looks to rapidly expand its footprint in the country.

The business is a joint venture between Australia investment bank Macquarie and Religare, a domestic equity trading company which is currently looking at buying ING’s Asian private banking assets.

Religare Macquarie has 220 staff and is present in Delhi, Kolkata, Mumbai, Hyderabad, Pune, Bangalore and Chennai. Both Religare and Macquarie intend to invest $20 million in the business over the next two to three years.

The business has a three-pronged approach to wealth management, according to a spokesman. It is focused on an advisory approach, a unique service model it calls ‘Tripod’ offering and a product offering which it claims is the widest in India.

Domestic players in India are becoming increasingly active in tailoring wealth services to their clients. Stockbroker KARVY last month launched a wealth management unit targeting clients with INR2.5 million ($52,000) in assets under management.

 

PRODUCTS

MS-SB restricts sale of certain ETFs

Morgan Stanley-Smith Barney has placed restrictions on the sale of leveraged, inverse and leveraged-inverse exchange traded funds as concerns mount over the level of tracking error in the products.

Proactive selling of the products by advisers will not be allowed in traditional brokerage accounts, the bank said. Customers who ask for the products will be able to purchase them, but only subject to enhanced oversight and review.

It added no purchases of the securities would be permitted in its advisory accounts.

“Financial advisers have been encouraged to review existing positions in these securities with clients to emphasise their unique characteristics and risks,” a bank spokesman said.

In June, FINRA, the US securities regulator, said certain ETFs were typically not suitable for retail investors who plan to hold them for more than a day. It said this was a result of compounding, a process which decays the overall return of an ETF relative to the underlying asset it is designed to replicate.

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