As Royal Bank of Scotland (RBS) withdraw its private banking services from yet another international region – India – a new player has risen to take the reins. Shiv Gupta, a senior private banker for RBS India, has won the bid to run the unit within his new company, Sanctum Wealth Management. Gupta shares his plans with John Schaffer
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Royal Bank of Scotland’s (RBS) recent withdrawal from India marks a continuation of the British lender’s exit from the international private banking market. Earlier in 2015, RBS sold off its Coutts International business to Swiss bank UBP, although RBS’ Indian private banking operation was not part of this deal.
RBS is not the first international bank to exit the Indian private banking market. UBS Group AG, Morgan Stanley and Macquarie Group have all withdrawn from the country’s wealth management space in the past two years.
In contrast to many of the recent private banking mergers and acquisitions, the Indian private banking arm of RBS was taken over from within.
Shiv Gupta has been the managing director for RBS’ private banking business for over six years and has previously held positions at Coutts in Singapore, BNP Paribas and Citi Private Bank. Gupta has taken over the business via his new company, Sanctum Wealth Management with the backing of venture capitalists such as Jayesh Parekh of Jungle Ventures, Nitan Nath of Mount Nathan Advisors and Shagun Kapoor Gogia of Tuscan Ventures.
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By GlobalDataThe company is set to acquire all of RBS’ onshore clients and staff, and will take over the management of all private banking assets. Sanctum Wealth expects the transfer of the RBS business to be completed by March 2016, pending approval from regulators.
Gupta will be joined in his new venture by two other RBS private banking executives – Puneet Periwal (ED & marketing head, west) and Anila Sachdeva (marketing head, north). Gupta tells PBI that there was a strong incentive to take over the business due to a favourable economic climate in India, promoting the growth of the wealthy population.
"When RBS announced its strategic decision to exit the international private banking business, that threw up an opportunity for us, given that we’d been involved in the lead up to this point.
"It just so happens that it is also happening at a time when the macroeconomic outlook, business outlook and generally the sentiment in the Indian economy is looking quite positive," Gupta tells PBI.
He adds that RBS had been investing in its private banking business, particularly during 2009/10, where the business had been "re-shaped" by hiring new staff and introducing new products and services, resulting in a "solid trajectory of growth".
Gupta’s confidence in India’s wealth market is not unfounded. According to Capgemini and RBC’s World Wealth Report 2015, India had a high net worth (HNW) population of 198,000 in 2014 and held US$785bn in wealth. This represents the highest growth rates across the globe for HNWI population (26.3%) and wealth (28.2%).
Gupta comments on the exit of international private banking players from the Indian market, suggesting that many of the exits were due to a global strategy, rather than a specific issue with the Indian market.
"It seems to me that it’s not always obvious what the reasons for exit are, or correctly attributed, and in some cases it’s linked to a larger global strategy, rather than something that is specific to India."
He adds that the wealth management and private banking market is actually rather competitive in the region and although some banks are exiting, others are taking the opposite strategy. He cites Julius Baer’s acquisition of Merrill Lynch’s international wealth management business including the Indian private banking unit as an example.
Differentiating factor
Gupta tells PBI that Sanctum is focussed on servicing the needs of HNWIs and ultra high net worth individuals (UHNWIs). The entry criteria for Sanctum’s target demographic is 5 Crores ($750,000), and Gupta says that the typical client will give Sanctum $1m of liquid assets to manage, although he adds that these clients are typically worth "four or five times that amount at least".
According to Gupta, current RBS clients can expect a smooth transition over to Sanctum "with the addition of a few elements".
"Clients are currently receiving investment advisory services across all domestically available asset classes. That’s direct equities, fixed income, mutual funds, structured products and alternative investments.
"Clients should expect to receive an enhanced version of all of those at Sanctum as well. In addition, clients should expect to see a derivatives platform that will be added around the time of launch. Clients should also see greater coverage on alternative investments."
He suggests that one of Sanctum’s differentiating factors in India’s competitive wealth management and private banking market is the company’s independence from a global business.
"I think being an independent domestic wealth manager may allow us a greater degree of flexibility, which will help us be a little more competitive than perhaps certain international wealth managers because they are bound by their global rules, which can act as a constraint in the local market place."
Gupta also suggests that Sanctum is well placed to meet the demand for domestic investments that Indian HNWIs require.
"There is an overwhelming concentration in domestic investments. The international component of the portfolios that we see is actually quite small, relatively speaking. Their perception of the benefit of diversification internationally is quite different from someone who’s sitting in a global location.
"So far as the domestic market is concerned, we provide coverage of all asset classes. To that extent diversification does happen. It happens through domestic products, instruments and to an extent, through international instruments that we can offer locally that are denominated in rupees."
Gupta also tells PBI that Sanctum is open to future acquisitions:
"We will be looking at all growth options positively and open-mindedly as we go along, whether they are organic or inorganic. If any suitable value creating acquisition opportunities show up, then we will be interested."
Shiv Gupta, founder of Sanctum Wealth Management
