Strategy & Practice Management

Report: Domestic banks need to step up to tap China's wealth opportunity

More than 60% of Chinese nationals with personal investible assets worth in excess of USD1 million now hold those assets offshore.

More and more of China's wealthy individuals are choosing to invest their wealth offshore, according to a latest McKinsey report.

According to the report, more than 60% of Chinese nationals with personal investible assets worth in excess of USD1 million now hold those assets offshore.

Chinese nationals with financial assets of more than RMB100 million (USD16 million) is expected to reach 134,000 by 2021, up 33% on 2016, the McKinsey report said.

Of that, 10% by value is currently being handled by foreign banks, the report claimed, putting domestic banks in a fight for Chinese HNWs.

According to the report, Chinese domestic banks, therefore, need to evolve to integrate investment platforms that span both onshore and offshore.

Domestic banks are also boosting their private-banking teams in financial centres such as Hong Kong, Singapore, London and Zurich, the report said. 

According to McKinsey, China is now expected to replace Japan as the world’s second-largest private banking market this year, second only to the US.

The report found that US dollar millionaires account for 0.5% of China’s total retail client base, but they contribute to 20% to 25% of total retail banking assets.