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Asia Pacific – Hong Kong And Singapore Outstrip Rivals In Growth As Wealth Management Hubs.

17 February, 2015

 


Hong Kong and Singapore are growing at a faster rate than Switzerland as wealth management hubs, analysis has shown. But Switzerland continues to manage more private wealth than any other country.

Deloitte Switzerland has analysed the international client asset development of the leading private wealth management centres worldwide, in its second Deloitte Wealth Management Centre Ranking.

 

Hong Kong has USD 0.6tn of assets under management to Switzerland’s USD 2tn, but its growth rate since 2008 of 142% outstrips Switzerland’s growth rate of 14%. Singapore has a growth rate over that period of 25% and assets of USD 0.5tn under management.

 

The UK is the second biggest centre, with USD 1.7tn – a rise of 13 % since 2008 – then the US with USD 1.4tn, and Panama and Caribbean with USD 0.9tn. “Switzerland remains the world’s largest centre, but other locations are catching up rapidly – especially Hong Kong, the US and Singapore,” Daniel Kobler, Deloitte Switzerland’s head of Banking Strategy Consulting, said in the report.

 

Globally, the international wealth management market volume grew by 2.2% from 2008, to a total of USD 9.2tn.

 

Much of that volume growth is down to capital market performance and economic growth, rather than new client assets, Deloitte said. A growing number of millionaires also helped, though, with the number of high net worth individuals growing from 8.6m in 2008 to 13.7m by 2013 – a rise of 59.3%. Many of these millionaires want to spread the countries where their wealth is managed, Deloitte said.

 

Repatriation of assets is also a factor in where wealth is managed. In a reaction to the loss of privacy and reduction of legal certainty in some centres – particularly Switzerland, Luxembourg and Liechtenstein – some clients have chosen to ‘repatriate’ their wealth.

 

‘Regularisation’ of assets has seen some clients penalised as part of treaties between their country of domicile and the country of their wealth manager, and regulatory pressure has encouraged others to transfer wealth from bank balances to non-banked assets such as watches, property and art.  

 

Overall, international wealth management centres experienced a drop of 23% in client assets, while Switzerland lost 7% of assets.

 

The overall profit margin for Switzerland has also decreased, to an estimated level of 24 basis points (bps) in 2014 (against 40 bps in 2008).

 

“Swiss providers face some challenges on both revenue realisation and sustainable cost management,” said Kobler.

 

It will be a challenge for Swiss institutions to return to pre-crisis profit margins, the report says, especially as most of their revenues are in foreign currencies while costs are in Swiss francs. Exchange rate movements have been unfavourable over a long period of time, it says, while “recent dramatic change in the value of the Swiss Franc will presumably affect 2015 profitability quite severely.”

 

Pinsent Masons

 

For further information, please contact:

 

Alexis Roberts, Partner, Pinsent Masons

alexis.roberts@pinsentmasons.com

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