The Hindu Business Line : Wealth management by banks poised to grow

Foreign banks, which mostly cater to high net worth individuals, with financial surplus or investible incomes of over Rs 2 crore per year, say that this segment is expected to grow by almost 20 per cent over the next couple of years.

The recently released study, 2005 World Wealth Report, by Capgemini and Merrill Lynch, indicating that the number of High Net Worth Individuals (HNWI) in India grew at 14.6 per cent, twice that of the world's growth of 7.3 per cent in 2004, augurs well for some of these banks.

DSP Merrill Lynch caters to 450 HNWI families, which is an increase of 50 per cent over last year, said Mr Amitava Neogi, Chief Administrative Officer, Global Private Client, DSP Merrill Lynch. "We cater only to a selective clientele. We want to target a 100 per cent growth this year," he said.

Mr Pradeep Dokania, Executive Vice-President, Global Private Client, DSP Merrill Lynch, said: "In India, wealth management is evolving into a business now. Now the markets have become more complex and people need somebody to guide them because the age of guaranteed returns is gone. Now people are too busy and want their wealth to be managed prudentially and professionally."

ABN Amro had about 500 client groups in 2000 and plans to target 3,000 to 4,000 client groups every five years, said Ms Sutapa Banerjee, Senior Vice-President, Head-Private Banking. Sensing the potential in this segment, HSBC, too, has thrown its hat into the ring and launched its private banking operations in India in May 2005.

About the potential for wealth management, Mr Sharad Mohan, Marketing Director, CitiGold Wealth Management, CitiBank, said, "Wealth management is a fast evolving domain with tremendous growth opportunity in India. In the current interest rate and taxation environment, more individuals are seeking professional management of their finances."

Wealth management, simply put, includes all financial services from `cradle to grave', according to Mr Kausik Deva, Head of Marketing, private banking, BNP Paribas.

"As the economy grows and the GDP grows, the potential for the growth of this business is huge. We offer all solutions from cradle to grave like banking, investment, tax management, legal solutions and transmission of wealth to the next generation," Mr Deva said.

Such a client is typically a promoter or an owner of a small medium enterprise, a top-ranking official with employee stock options, a professional such as a lawyer or an NRI. The services would normally comprise investment under assets such as equity, mutual funds, debt, insurance and specialised services such as estate management.

The asset allocation plan is formed after taking into account risk appetite and time horizon of each client. Regular monthly or quarterly review of the client's portfolio is also part of the service providers' job. Customisation is the key. "As we offer holistic wealth management, we even offer advice about art as an investment for which we tie-up with experts," Ms Banerjee said.

Citibank has a helpline that offers support services, including home maintenance, purchase of movie, train or air tickets. BNP Paribas is considering offering trust services for those who inherit wealth, said Mr Deva, an idea that is yet to catch on in India.

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