Asia wealth managers see growth, risk

By Tony Munroe - Analysis

TOKYO (Reuters) - Asia's prosperity has triggered a boom in financial services targeting the newly minted rich, but competition is intensifying, experienced bankers are at a premium and regulation is a work in progress.

Add to that the time and expense of building a business based on personal relationships, and the path to profits can be long.

"Private banking is very service-intensive. It's a very costly business model to offer," David Seymour, global head of KPMG's investment management and funds practice, told the Reuters Wealth Management Summit this week.

Indeed, France's Societe Generale (SOGN.PA: Quote, Profile, Research, Stock Buzz) entered the Japanese market in 2002 and expects to become profitable only in the next few months despite increasing its assets under management by 30 percent to 40 percent a year.

While the concept of personalized one-stop financial services shopping for the rich is well established in Europe and the United States, it's a novelty in Asia.

""Universal banking is not yet the thing in Japan," said Francois Barbe, the chief of Societe Generale's Japanese private banking business.

Asia's allure is outsized growth in high-net-worth individuals, or those with investable assets of at least $1 million, thanks to surging economies such as China and India. In a recovering Japan, the wealthy are expected to pour $2.5 trillion to $4.25 trillion of savings into investment products over the next four to six years, said Timothy McCarthy, the chief of fund manager Nikko AM 8603.T.

Merrill Lynch/Capgemini expects the wealth of millionaires in Asia to grow by 6.7 percent a year through 2010 to $10.6 trillion, ahead of the global average of 6 percent. Credit Suisse estimated last year that just one in five rich Asians use private banking services.  Continued...