Private banks around the world are expected to enjoy unprecedented growth over the next three years with assets under management expected to increase by 30 per cent per annum, according to a new study.
Asia-Pacific and eastern Europe are expanding the fastest as banks rush to tap into the growing ranks of the wealthy in these markets, according to the 2007 global private banking study by PwC which questioned senior executives of 265 organisations in 43 countries.
In Asia-Pacific, those chief executives questioned expect assets under management to increase by an annual rate of 34 per cent, and in Russia between 30 per cent and 50 per cent.
The study found that private banks planned to move into these more lucrative markets through acquisitions.
Almost 90 per cent of chief executives believe there will be at least some, if not significant consolidation, in the private banking industry and more than half of chief executives questioned plan to open operations in new countries over the next two years to target new wealthy clients
Bruce Weatherill, global private banking and wealth management leader at PwC, said: “Buoyed by rising global wealth, wealth managers everywhere are anticipating extremely high rates of profitable growth that have not been seen during the 14-year history of our survey and probably at any other time.”
It was “a time when strategic choices have to be made and finite resources have to be focused on serving existing clients as well as supporting highly ambitious growth plans”。
The study also suggested that in future, wealth managers will be responsible for investing a greater proportion of their clients wealth.
Currently, under half of all wealth managers hold more than 40 per cent of their clients' investable wealth - but over the next three years this proportion is expected to increase dramatically so that 80 per cent of wealth managers hold 40 per cent of a client's wealth.
The study found the biggest challenges were recruiting and retaining enough relationship managers to support the aggressive growth of private banks.