19/12/24

HONG KONG: Private Banks Boost Hong Kong Hiring to Woo Rich Chinese Clients

As published on: bnnbloomberg.ca, Thursday 19 December, 2024.

Wealth managers are ramping up hiring in Hong Kong to cater to an inflow of mainland Chinese money.

UBS Group AG is adding staff as it looks to double the assets it manages for millionaire clients in Greater China over the next three to five years. Bank of Singapore has boosted staff in Hong Kong by 30%, while Julius Baer Group Ltd., a Swiss wealth manager, grew its office space in Hong Kong by 40% last year along with hiring.

For the city, it’s a welcome reprieve after years of political turmoil, rigid Covid restrictions, and an exodus of people. Led by policies to entice the rich, the push is likely to see private wealth assets nearly doubling to $2.3 trillion by 2030 as Chinese seek offshore diversification, according to Bloomberg Intelligence.

“This year, we’ve seen an increase in mainland Chinese clients due to various government initiatives,” said Jamee Wong, head of private client, Greater China at the wealth management arm of UBS. “We’re strategically expanding our team in Hong Kong by hiring new client advisers and team heads.”

Hong Kong has been rolling out the red carpet for family offices and the wealthy with tax concessions as well as residency plans. Affluent Chinese have moved billions to the city, seeking higher yielding investments and snapping up insurance. A flow of cash to rival Singapore has also slowed after the island state stepped up scrutiny following a blockbuster money laundering case.

While Chinese have for years sought to park their money offshore, Xi Jinping’s push for “common prosperity” has accelerated that process. The slowing economy and sinking real estate prices have also prompted the wealthy to look overseas.

The tide has also shifted to the modestly wealthy — with assets of $5 million to $10 million. Hong Kong’s Private Wealth Management Association predicts that the number of firms targeting the lower wealth segment will see the biggest jump over the next five years.

Overall, private wealth net inflows to Hong Kong nearly tripled to HK$341 billion ($44 billion) in 2023, according to the association. Total assets rose to about HK$9 trillion after sliding for two years.

Since launching in March, over 500 have applied for a plan that offers residency to people who invest HK$30 million in Hong Kong. Government body InvestHK estimates they will bring in more than HK$15 billion to the city.

The expansion in wealth helped boost licensed finance jobs to a record of almost 42,000 in October, offering momentum to the financial hub which has struggled with an exodus of people in the wake of the pandemic.

Among other large banks, Standard Chartered Plc is planning to double its investment in the wealth business in coming years, adding staff in Hong Kong and other cities. Citigroup Inc. plans to add talent in Hong Kong as it’s bullish on the city and its links with the surrounding Greater Bay Area in mainland China, wealth chief Andy Sieg told Bloomberg Television in September.

The talent plan has contributed to an influx of white collar professionals with young families relocating to Hong Kong, said Wong at UBS. To cater to digitally savvy mainland Chinese clients, the Swiss bank has enhanced its digital capabilities and offers authorized communication channels via WeChat and WhatsApp.

Bank of Singapore, the private banking arm of Oversea-Chinese Banking Corp., boosted the number of relationship managers by more than 30% in Hong Kong through October this year and plans to hire more, according to Rickie Chan, head of private banking for Greater China.

Chan is seeing “strong demand” from the $5 to $10 million segment but also the $100 million and above segment. Chinese clients are observing what’s happening in the US and geopolitics more closely, and are looking to diversify their investments and the banks they work with, he said.

“Amid geopolitics, we have been seeing a lot of interest from Chinese clients to open accounts with an Asian bank,” said Chan.

Simple accounts, including individual accounts with a very clear source of wealth, can take days to open but for more complicated accounts, it can take up to two months, he said.

The bank works closely with its OCBC China, which has commercial and corporate banking relationships as well as onshore private banking. It also collaborates with Bank of Ningbo, in which OCBC has a 20% stake, for referrals.

Mainland Chinese face strict capital controls that only allow the equivalent of $50,000 to be taken out annually.

Julius Baer expanded its Hong Kong office by over 40% last year, and continues to “strategically hire” relationship managers to strengthen its front office, according to David Shick, market head for Greater China.

Investing

The Swiss bank has seen inflows from Greater China clients this year, and clients are “progressively transitioning” from holding cash to making investments across asset classes, including equities, fixed income and alternatives, according to Shick. It has cut down its accounting opening times by 20% across Asia, he said.

Julius Baer also has a strategic partnership with GROW Investment Group, a Chinese asset management company.

Consultants such as Deloitte are also seeing increased inquiries from mainland clients for advice on immigration.

“I’m getting three to four calls daily from clients regarding immigration-related matters including the capital investment entrant scheme,” said Patrick Yip, vice chair for Deloitte China. “Many of the wealthy Chinese are looking for options. They want to be able to travel with a “user-friendly” passport and get education overseas for their kids.”

For the cash for residency plan, we need to verify their assets for the past 24 months, and that’s the “most complicated part,” according to Yip.

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Hong Kong Private banks