STRATEGY
KARVY sets up Indian wealth venture
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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.”
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By GlobalDataThe 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.
