OCBC has agreed to acquire National Australia Bank’s (NAB’s) private wealth assets in Hong Kong and Singapore. The Australian lender is not the first to retreat from Asia, as foreign banks are finding it harder to compete.
NAB has announced it is selling its private wealth business in Singapore and Hong Kong to OCBC. The business serves approximately 11,000 customers, with mortgages amounting to around $1.7bn and deposits of about $3.05bn.
One of the largest and fastest-growing wealth markets, Asia is an attractive region to operate in. Liquid assets held by HNW investors are forecast to record a compound annual growth rate (CAGR) of 8.0% over the next four years, compared to a CAGR of 5.3% for the rest of the world, as per our Global Wealth Markets Analytics.
Yet NAB is only the most recent provider disposing of its Asian operations. In 2016, OCBC also bought Barclays’ wealth and investment management business, while DBS acquired ANZ’s wealth management and retail business in five Asian markets. ABN Amro, Coutts, and Societe Generale also decided to dispose of their wealth units.
Increased costs – due in large part to regulatory burdens – represent one important reason why many players decide to focus their strengths on their home markets. However, this is not the only factor. Asia is a tough market to break into and compete in. Our survey data shows that 53% of individuals in Asia quoted that a local brand was a key influencing factor in why they chose their main bank, and the figure is as high as 65% in Singapore. In contrast, only 42% of non-Asian respondents agree.
For a foreign player to succeed in Asia’s growing wealth markets, a brand image reflecting local values is paramount. Smaller players in particular will do well to adapt to local imagery and adjust their brand communication accordingly.
By Heike van den Hoevel, Senior Wealth Management Analyst