UBS Group plans to add clients in China by going after people with smaller fortunes once the world’s largest wealth manager receives a licence to do business on the mainland.
The bank will explore all avenues for accessing the domestic Chinese market, including partnerships, chief financial officer Kirt Gardner said on Friday after the Swiss bank reported third-quarter results. UBS, which is awaiting a licence to offer services in yuan in onshore China, last year bought a stake in Postal Savings Bank of China Co.
“China domestic is a huge target for us,” Gardner said. “We expect to address a segment that would sit slightly below, certainly below, our ultra-high net worth business.”
North American and European private banks are scrambling to access the domestic market in China, where the number of millionaires rose 16% last year, more than in any country tracked by Capgemini SA’s annual wealth report. Private wealth in the Asia-Pacific region surpassed that of North America for the first time, with China surging, according to the report published in June.
The Asia-Pacific region has contributed the biggest chunk of net new money for UBS’s wealth management business in each of the past four quarters. In the three months through September, it accounted for a net 5.1bn Swiss francs ($5.1bn) in new money, including a single, large inflow from greater China. By contrast, Europe brought in 3.9bn francs, Switzerland 1.1bn francs and the Americas division $800mn.
China has loosened restrictions on market access for foreign banks in recent years, prompting some to seek licences to offer services in the yuan. Historically banks have served rich Chinese from offshore centers such as Hong Kong and Singapore.
UBS plans to double its staff in China over five years, adding about 600 people across wealth management, investment banking and asset management, Chief executive officer Sergio Ermotti said in January. Banks such as JPMorgan Chase & Co, Goldman Sachs Group Inc and Citigroup Inc already also have licenses or joint ventures in China.
“Because China is such a unique market clearly we are going to look at all different opportunities for addressing the domestic market,” Gardner said. “And that will include what we do directly through our own client advisers that we expect to hire going forward, once we have our full licence.”
Some banks have acquired shares in local asset managers to build their knowledge of the local market. Julius Baer Group Ltd, Switzerland’s third largest wealth manager, acquired a stake in Shanghai-based Jupai Holdings Ltd last December. The Zurich-based bank expects private wealth in the country to increase to more than $8tn by 2020.