A Canadian bank is the latest firm to think about pulling out of Asian private banking because of its sub-scale size.
Societe Generale and ANZ to DBS, Barclays Wealth to Bank of Singapore, Coutts to Union Bancaire Privee and most recently ABN Amro to LGT – the list of banks selling to larger rivals in Asia is growing.
Add the Royal Bank of Canada (RBC) to the list of those reviewing Asian wealth management, according to a report from «Reuters» citing four sources.
Asia Wherewithal
While private banks are identifying Asia as a key growth market, not all have the wherewithal to keep pace with compliance costs rising in large part due to the 1MDB scandal. Margins have also come under pressure, as digitization takes hold.
Asian customers are also «highly cost-intensive,» as Evrard Bordier, partner at Geneva-based Bordier, told finews.asia. Taken together, it means firms have to bulk up or get out – and many have done so in recent months.
Enough Profit in Asia?
RBS is considering whether it can reap a decent profit from the less than $10 billion in assets that it manages in the region.
«There will definitely be a question mark over profitability of this kind of a business that lacks scale. Is it a core business for RBC in Asia? The answer is, probably not,» one source was quoted by «Reuters».
The ongoing deliberation over the Canadian bank's Singapore and Hong Kong operations may not ultimately lead to a sale, the people said. A spokeswoman for RBC didn't comment.
If RBS, Canada's largest bank with a sizable wealth management presence in North America, does decide to sell out, it will not want for suitors: consolidation in Asia has heated up, as domestic banks like DBS scale up to compete with heavyweights like UBS and Citigroup.
