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February 25, 2010updated 04 Apr 2017 3:54pm

Next 18 months key in India

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.

By Will Cain

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.

StanChart of new clientsThe 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.

This 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.

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