Business Times: Private banks want slice of NRI action

Non-resident Indians with cash to invest now being wooed out of Singapore
By LYNETTE KHOO

(SINGAPORE) Private bankers have set their eyes on the rising wealth of non-resident Indians (NRIs) whose businesses are usually closely tied to the booming Indian economy.

Despite difficult market conditions, some banks are looking to expand their team of relationship managers working on this segment as they expect the NRI slice of their private banking pie to grow quickly.

‘We have close to 80 people now, but I won’t be surprised if we double our staff count over the next two years,’ said Balakrishnan Kunnambath, SG Private Banking managing director and global head of Indian subcontinent.

Sandeep Sharma, head of Barclays Wealth South Asia, told BT that he is now looking to more than double his team of 15 private bankers who handle the NRI segment over the next six months.

This mirrors the growth expected from the NRI segment. Private banks typically do not provide breakdowns on assets under management (AUM) in each segment, but they note that the growth in their NRI segment has been rapid.

This trend is unlikely to reverse despite the market turmoil globally, according to the private banks.

‘India has seen a lot of slowdown in the last five to six months but we are of the opinion that the structural story remains very robust,’ said Mr Kunnambath.

SG Private Banking is projecting a steady growth of 35 per cent to 40 per cent in Asia. Its AUM in the Asia Pacific region now stands at US$20 billion, having grown by above 30 per cent each year.

Clients need to have a minimum of US$1 million to open an account with Barclays Wealth or SG Private Banking.

Barclays Wealth – which started reaching out to this NRI segment with investible funds of at least US$5 million only last November – expects the segment to make up 30 per cent of the AUM and revenues in Barclays Wealth Asia Pacific business by mid-2010.

‘A lot of bankers, researchers and clients have no idea how far this market correction is going to go,’ Mr Sharma said. ‘We took an approach after January-February to be very conservative and offer more products that protect capital rather than chase returns.’

Such products are diversified across various asset classes and are a good substitute for cash as they still allow clients to participate in any potential upside, he added.

Barclays Wealth is now making sure that its team consists of bankers who are familiar with specific geographies and languages to better tap the different markets. It is also capitalising on its links with the investment banking arm to offer families of those businesses with private banking services.

Both SG Private Banking and Barclays Wealth have designated Singapore as a hub for their NRI business. The pool of NRIs here is not necessarily the largest in the region but these banks said they have been attracted to the country’s supportive banking jurisdiction.

SG Private Banking is also expanding its onshore private banking that targets those with investible funds of above US$600,000. It hopes to expand its presence beyond Mumbai, Delhi, Bangalore and introduce more structured products to onshore clients.

To that end, SG Private Banking has applied for the non-banking financial companies licence in India to broaden its reach there and broaden the range of structured products that it can offer to onshore clients.

Mr Kunnambath said he hopes to receive the licence towards first-quarter next year.

SG Private Banking is also one of the silver sponsors for the conference for NRIs here on Oct 9 to 11 – the first time this conference is being held outside of India.

Speakers at the conference include Singapore’s Minister Mentor Lee Kuan Yew, Senior Minister Goh Chok Tong and Prime Minister Lee Hsien Loong, as well as ministers from India. This reflects the level of importance ascribed by both countries on the NRI market.

The business-focused conference in Singapore, targets the Indian Diaspora within the Asia-Pacific and beyond.

Source: Business Times – 05 Sept 008