Standard Chartered Private Bank is
gathering client assets in India at a rate of $250 million a
quarter, and aims to have $2.5billion to $3 billion by the end of
2010.
Soumya Rajan, head of the private bank in
India, told PBI that StanChart would hit the target by doubling its
relationship managers in the country to 100 by 2012 and expanding
its branch network. Most of the new appointments will be made in
the core wealth markets of Mumbai, Delhi and Bangalore, but new
teams are also being built in Chandigarh and Hyderabad, where the
bank will open offices later in the year.
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The expansion of StanChart’s private bank comes at a time
of intense competition in India for wealthy clients. Barclays
Wealth earlier this month announced it would increase its staff in
the country by 20 percent a year for the next three years.
“The market is still fragmented and even the
dominant players are still fairly undifferentiated,” said
Rajan.
“The next 12 to 15 months will be a vital
period for the leading players to establish themselves. There are a
lot of private banks in the $1 billion to $5 billion bracket, and I
think it will be over the next 18 months that we will much more
differentiation between those that are playing at the top level and
those that are not.”
The expansion of StanChart’s private banking
staff comes after rapid growth in the business. It has seen assets
under management increase from $100 million when it was set up in
2007 to $1.5 billion by mid-2009. Fifty to sixty percent of the
private bank’s growth has come through referrals of wealthy
business clients using its wholesale banking platform.
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By GlobalDataThis stock of high net worth individuals
already on the books of Standard Chartered was the main rationale
for setting up the private bank.
Rajan said 50 percent of new clients in the
private bank continue to come from referrals from the corporate
bank, while 30 percent were from new client acquisitions and
referrals from existing clients. The remaining 20 percent came from
StanChart’s consumer banking arm, which Rajan said presents the
best opportunity for growth in the coming year.
“The new trend we are seeing is that there are
now many new-to-private banking clients in the market,” said Rajan.
“That is the exciting and interesting case I am beginning to see,
and it is on the retail side.”
The new branch openings in Chandigarh and
Hyderabad are a way of targeting these individuals. There are plans
to develop a hub and model similar to the one being used at
Barclays Wealth in the country, with StanChart’s seven private
banking outlets serving wider areas. This will add a further five
or 10 new markets to the private bank’s footprint without the need
for dedicated private banking branches.
For example, Rajan said, the Mumbai office
could serve the cities of Goa and Pune to the south, Nagpur to the
east and Ahmadabad to the north.
This would leverage the bank’s existing
network of branches in the country, which currently numbers 94 in
34 towns or cities, the highest of the foreign banks operating in
the country. Barclays Wealth said it would use its Delhi office to
cater for the north, Mumbai for west and central India and Kolkatta
for the east.
“We believe the future in terms of expanding
the market is in a geographic and distribution point of view, and
we are finding there is space for us there” added Rajan.
Rajan said StanChart would face tough
competition in the onshore market from domestic banks with wide
existing branch networks, though she added most were targeting
“priority-plus” clients of between $500 million and $1 million in
investable assets. StanChart is starting to raise its threshold,
and is aiming at target investors of around $3 million.
In a tight market for private bankers in the
country, the bank will meet the hiring target in part by training
existing staff. It is also looking at recruiting bankers with asset
management experience.
