Wealth creation has remained largely immune to the adverse impact of the pandemic, but this didn’t mean that private bankers and wealth managers in Asia had an easy job servicing their clients during the awards period.
Industry players had to quickly adapt to the new normal, accelerating technology adoption in the sector, as rewards awaited only those who moved fast to harness the opportunities in the market.
The competitive landscape in the region was characterized by shifting market positions with at least two major players undergoing business restructuring. In addition, there was a stronger focus on environmental, social, and governance (ESG) offerings, as well as continuing technology transformation.
In China, the fastest growing wealth market in the region, regulators had begun introducing reforms designed to standardize business practices and enhance consumer protection in the private banking and wealth management sector, in a bid to enhance the overall standards of the industry.
It is in this context that we announce the winners of The Asset Triple A Private Banking and Wealth Management Awards 2021.
The wealth management industry in China has seen its assets under management (AUM) grow to more than 100 trillion yuan (US$15.5 trillion). And the competitive landscape here is very unique. The market’s rapid growth and potential new businesses have provided an exciting playground that is large enough for most of the wealth managers and private banks to get a piece of the action, despite the pandemic.
In the private banking business, an area which is largely dominated by joint-stock commercial banks and state-owned banks, most of the major players have recorded double-digit growth in terms of AUM and number of clients.
But the fierce market environment has also seen improper or even illegal practices. Major banks in China have been warned or penalized by the China Banking and Insurance Regulatory Commission (CBIRC). In May 2021, the regulator announced that it had slapped fines totalling 366 million yuan on institutions and individuals for various irregularities, many of which relating to the wealth management business.
Some of the common illegal cases include providing guaranteed returns illegally, distributing high-risk wealth management products to unqualified investors, lack of transparency in product information, etc. The penalties were particularly serious in the case of some commercial banks, which tend to have more flexibility compared to state-owned banks when it comes to servicing wealth clients, including high-net-worth individuals (HNWIs) and ultra-high-net-worth individuals (UHNWIs).
This indicates that the market is still finding its direction amid the growing demand and tightened regulations. CBIRC started the investigation in 2018, and banks have been increasingly turning away from inappropriate or illegal practices, giving boutique wealth managers a chance to expand their business.
Actions taken by the governments and central banks to mitigate the economic impact of Covid-19 in 2020 resulted in total global wealth growing 7.4% to US$418.3 trillion and wealth per adult rising 6% to another record high of US$79,952, according to the Credit Suisse Global Wealth Report 2021.
The second half of 2020 caught private bankers, wealth managers, and investors by surprise as share prices continued to skyrocket, reaching record levels by the end of the year and resulting in major gains in asset prices as well as household wealth across the world.
Total wealth rose by US$12.4 trillion in North America and by US$9.2 trillion in Europe, while with China added US$4.2 trillion and the Asia-Pacific region (excluding China and India) another US$4.7 trillion.
Private bankers and wealth managers, leveraging technology, communication and work-from-home capabilities that were developed following the spread of Covid-19 earlier in the year, reaped the rewards by posting strong growth in their businesses despite the pandemic.
Widespread disruption to the general economy brought on by repetitive cycles of lockdowns, easings, and quarantines continued through 2020 and 2021. But in contrast, wealth growth among HNWIs and UHNWIs exhibited the opposite trend and continued unabated.
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