Foreign banks chase China's 'super rich'

• Source: Global Times
• [10:22 July 15 2010]
• Comments

Winston Lim, insurance director of Citibank (China), told the Global Times Wednesday that, when it comes to China, there are some difficulties in distinguishing individual clients' personal assets from the assets of their companies.

Horst Loechel, adjunct professor of economics at the China Europe International Busi-ness School, told the Global Times Wednesday that it is more difficult for foreign banks to distinguish between the private assets and company assets of their customers in China than overseas. "The accounting systems in Chinese firms are not as well established generally as they are in the West. Sometimes the line between a personal asset and a company asset could be hard to draw," he said.

Local competitors are another challenge for overseas banks in the sector. Bank of China, Industrial and Commercial Bank of China, China Merchants Bank, China Ever-bright, and Bank of Communications, among others, have already stabilized their wealth management customer base. This is also reflected in the PwC report, which said domestic banks are continually lifting their game in the area of wealth management.

"It will take time for foreign banks to build credibility in China in the private banking business, as they have been in the market for no more than five years, while Chinese banks have a longer history," Loechel said. "Foreign banks also saw their reputations damaged by the financial crisis. Thus some rich people in China prefer to choose Chinese banks to take care of their money."

According to Rupert Hoogewerf, the publisher of the monthly Hurun Report, best known for its "China Rich List," Chinese banks that are prevailing in the corporate banking sector have a natural advantage when it comes to developing a private banking business. "The growth in the number of rich people in China is very fast and will continue its pace for the next 15 years, as the number of businessmen swells," Hoogewerf told the Global Times Wednesday.