Morgan Stanley, one of the largest US banks, has incorporated its Asia wealth management unit in Hong Kong to get a larger slice of the region's burgeoning private bank business.
The Wall Street titan's Morgan Stanley Asia International Ltd is set up as a restricted licence bank in Hong Kong and its Singapore wealth management business operates as a branch of the Hong Kong bank, said Nick Chan, managing director.
With this, Morgan Stanley is the only global wealth manager whose Asia business is managed via a locally incorporated bank, said Mr Chan in a March 13 interview with The Business Times. "The incorporation of a bank in Asia demonstrates the firm's continued commitment to our wealth management business in the region and enables us to make business decisions relating to Asian clients in Asia," he said.
The 2013 Asia Pacific Wealth Report by Capgemini and RBS Wealth Management found that the number of individuals with investable assets of at least US$1 million grew by 17 per cent to 4.3 million, while their wealth expanded by 18 per cent to US$14.2 trillion. The growth rates for the rest of the world were 13 and 12 per cent respectively.
Previously, the firm had operated its Asia private wealth management business through the Hong Kong and Singapore branches of Bank Morgan Stanley AG, a Swiss bank headquartered in Zurich. In April 2014, Morgan Stanley announced the sale of the Swiss bank business, excluding the Hong Kong and Singapore branches, to Bank Safra Sarasin.
With incorporation, all decision- making is locally based and clients can book in Hong Kong or Singapore, he said. "It makes a big difference to clients," said Mr Chan. For instance, "spreads on loans can be taken here, we don't have to wait for head-office decision".
Its three biggest markets in Asia are Greater China, Indonesia and Singapore, in that order.
Last year, despite growing its assets under management (AUM) by 7 per cent to US$70 billion, Morgan Stanley slipped in the top Asia private bank rankings to ninth spot from eighth in 2013, according to the Asian Private Banker. The US bank was overtaken by DBS Bank which took the eighth spot because its AUM shot up 34 per cent to US$73.2 billion, following the acquisition of Societe Generale Private Banking Asia.
Shrugging off the rankings, Mr Chan, who is responsible for South-east Asia, the Philippines and Taiwan, said that the bank is focusing on its strategy of providing the institutional platform to private bank clients. "We are the only private wealth adviser that is structurally and organisationally part of an institutional business locally."
Globally, the wealth management business has over US$2 trillion in client assets and makes up around 45 per cent of Morgan Stanley's total global revenues, he said.
"This means we are unique in being able to give our clients direct institutional access to our highly ranked research, equities, fixed income, currency, private equity and investment banking platforms - and that is a powerful place to be."
Year-to-date, Morgan Stanley placed fifth in the global equity capital markets bookrunner ranking by Dealogic. It took the seventh spot for equity capital markets bookrunner ranking for Asia excluding Japan.
Private bank clients access the same research team and their reports which are provided to pension funds or sovereign wealth funds.
"It's not a separate private bank research banking department," he said. "We're the only bank to invite private bank clients to corporate trips."
Private bank clients have found themselves going with the bank's analysts to visit fast-growing firms in China and sitting among chief investment officers who manage vast pools of funds, he said.
For that kind of access, private bank clients have to place a minimum of US$5 million to be a Morgan Stanley customer.
Singapore will play an increasingly bigger role in the bank's private bank ambitions.
Currently, the bank has around 100 relationship managers in the region and 30 are in Singapore covering South-east Asia. The intention is to grow the sales force by 10-20 per cent a year, he said.
"As part of our Singapore expansion, we have recently opened a dedicated Greater China desk in Singapore to serve those Chinese clients with strong links to Singapore," said Mr Chan.
Many Chinese entrepreneurs have families and business operations in Singapore, he said. "They like to be here. Given the strong momentum in our business in the ASEAN region, we expect the growth of our Singapore team to be faster than that of Hong Kong."
In Singapore, Morgan Stanley has about 400 employees across all its businesses.