Nomura sees opportunity in private banking in Singapore
Singapore benefiting from a surge in Asian wealth.
Singapore has one of the highest number of ultrahigh net worth residents whose assets total over $1 billion, even though it is a small country with a population of just 5.7 million.The COVID-19 pandemic has accelerated the inflow of foreign money. Total deposits of residents outside Singaopre at Singapore's financial institutions has increased 20% year-on-year since January 2020, reaching the highest-ever level of SG$64.2 billion in January this year, according to an article in NikkeiAsia.
With such an inflow of wealthy people, financial institutions have been focusing their resources on private banking. In September, Nomura Holdings hired Ravi Raju, who headed private banking in Asia-Pacific at UBS. Raju, based in Singapore, is responsible for expanding assets under management as head of the international private banking operation.
Nomura plans to increase the number of sales staff in Singapore and Hong Kong to about 100 by the end of March 2023 from about 60 currently. It also has a target of increasing assets under management by 250% to USD 35 billion by the end of March 2025.
Many high net worth individuals in Europe and the U.S. have inherited their wealth, unlike their Asian counterparts who tend to be entrepreneurs that have amassed vast fortunes in a single generation. These entrepreneurs, keen to expand their empires, have changed the way banks work.
Nomura transferred its private banking business in Asia excluding Japan to its wholesale division from its retail division, so that "we can offer specialised services designed for institutional investors, including currency hedging and leveraged loans, to wealthy individuals," said Yuji Hibino, senior managing director in charge of Asia wealth management.
Nomura's strategy is also to exploit Singapore's convenient location between East and South Asia. From Singapore, the company is targeting wealthy Indian expatriates and Middle Eastern accounts. Such a strategy is also commonly adopted by the private banking divisions of Singapore's local banks. In particular, successful efforts to solicit wealthy individuals in greater China is believed to have contributed to driving up the fee revenues of these banks.
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