Private banking for rich 'faces golden era'

Wealth managers face a massive learning curve but great potential

In February 2008, when Wang Lu, a 24-year-old graduate, received a job offer from a Beijing-based bank, she was proud of herself. The job was private banking account manager and she stood out among thousands of qualified applications, all of whom held at least a postgraduate degree from world-renowned universities.

China is driving most of the growth of Asia's high net worth individuals' market. The country is estimated to contribute more than 50 percent of the growth in Asia. [Zhang Han / For China Daily]

As one of the first professionals in the private banking sector in China, Wang can still recall her first days.

"I sat in a spacious room. It was sunny and well decorated and it had a library covering various topics from antiques to the zodiac," said Wang.

She sat in that office alone for almost two months with no clients.

"I lost five kilograms in weight by walking around in my office and reading a dozen Chinese medicine books. Otherwise I'd have been bored to death," said Wang.

Today Wang has 18 clients who put a total of 500 million yuan ($79 million) in their accounts. However, she said she does not take it as a "permanent achievement".

"The pressure is great because clients may shift their money to other banks at any time, just like they shifted their money to my place," said Wang.

It has been only five years since the first private banking services started in China, many of which were offered by foreign-funded banks, including Citi and HSBC Holdings Ltd.

By 2012, China became Asia's most important high-net-worth (HNW) market (defined as individuals with more than $1 million in investable assets), contributing to more than 50 percent of the region's growth by 2015 (excluding Japan), according to a recent report jointly released by China Minsheng Banking Corp and McKinsey & Company.

According to the report, China is driving most of the growth of Asia's high net worth individuals market. The country is estimated to contribute more than 50 percent of the growth in Asia. Revenues from private banking are expected to grow from 23.3 billion yuan in 2010 to 46.8 billion yuan by 2015, more than half of which will be from first- and second-tier cities.

In terms of the number of HNW individuals today, 40 percent are located in the Pearl River Delta, 31 percent in the Yangtze River Delta, while another 11 are in the Bohai region.

China's rich have multiple private banking relationships and they value asset growth over asset preservation. China's HNW individual segment is comprised mostly of males between the ages of 40 and 60. Today, on average, 60 percent of Chinese HNW individuals have one or more private banking relationships. The number of private banking relationships increases significantly with increases in wealth: More than 90 percent of Chinese HNW individuals with investable assets of at least 100 million yuan have one or more private banking relationships.

By the end of 2012, more than a dozen domestic banks, including State-owned lenders, city commercial banks and shareholding banks, had started offering private banking services to their clients.

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