Apr 5, 2011

The Rise of Chinese billionaires: Outlook for Chinese private bankers

China is home to an increasing number of high and ultra-high-net worth individuals, including 115 US dollar billionaires, but its private banking sector remains underdeveloped. Relationship managers are in short supply and demand for their services is gradually starting to rise, despite restrictions on private banking platforms in China.

This year the mainland almost doubled its number of billionaires from 2010′s 64 to 115, according to Forbes magazine’s recently published list of the world’s richest people.

But there are not many private bankers in China. “The bulk of the retail/consumer banking business in China skews towards retail banking and priority banking, largely due to the constrains of the Chinese regulatory framework,” says Vivian Ng, managing director, Morgan McKinley.

Private banking in China is in its infancy compared with mature markets such as London, Hong Kong or Singapore. “Most of the private banking business in China, especially for ultra-high-net-worth individuals, is currently being handled by offshore desks in other Asian regions,” she adds.

Salaries are generally lower than Singapore, Hong Kong or Tokyo, mainly because private bankers in China operate on a retail banking platform, rather than a private banking platform, adds Ng. They can’t offer the same range of products.

But although the sector is still comparatively small in China, banks are gearing up for future growth and private bankers are starting to become increasingly sought after. “There is an enormous amount of optimism regarding private banking in 2011,” adds Ng.

There is a shortage of relationship managers who can cater to the needs of wealthy Chinese because the demand for private banking services is so recent. And it is challenging for employers to identify professionals who can easily transfer their expertise and clients.

“Most banks in China need ultra-high-net-worth private bankers as the concept of money management propels people to want to earn more money than just saving it in a bank,” says Clemmie Zhang, banking consultant, Antal International. He says domestic firms need to recruit more private bankers because they are opening more branches.