UBS, Citi among banks hit by Asia rich clients’ pullback

SINGAPORE (BLOOMBERG) – A slump in client trading activity in Asia is threatening to slow a lucrative earner for the world’s biggest wealth managers. UBS Group and Citigroup are among banks whose wealth revenues for the region likely declined by double digits in the first half, people familiar with the matter estimated, asking not to be identified discussing private information.

Credit Suisse Group, which last month warned that results in the second quarter were impacted by clients pulling back, is poised for a similar drop, the people said.

The anticipated shortfall contrasts with a strong performance last year, underscoring how weaker client sentiment is overshadowing a key business for banks that service the global rich.

China’s crackdown on a broad swathe of industries, from technology and education to gaming and property, has roiled Asian markets, leaving clients sitting on losses and reluctant to trade.

After dominating growth in the number and wealth of high-net-worth individuals over the last decade, Asia fell behind Europe and North America in 2021, according to a report from consultancy Capgemini.

Some lenders are now turning more cautious as a years-long hiring spree meets more gloomy growth projections.

“Hiring has definitely slowed down compared with last year,” said Mr John Mullally, regional director for southern China and Hong Kong financial services at Robert Walters. “It is not like 10 years ago where private banks hired people such as hairdressers because they had a Rolodex of wealthy customers.”

Credit Suisse has given new relationship managers in the region more time to meet revenue targets given market conditions and travel restrictions during the pandemic that have made it hard to meet clients face to face, people familiar with the matter said.

The first half was “a tough time for all of us”, said Ms Amy Lo, co-head of Asia-Pacific wealth at UBS, the region’s biggest private bank, on the sidelines of an investment forum in Hong Kong earlier this month. “Volatility is here to stay.”

It is a sharp reversal from 2021, when governments pumped money into markets, supporting buoyant stocks while the pandemic prompted prolific trading among the wealthy. With interest rates rising, fears of a recession are looming, and American shares have seen the worst sell-off in half a century.

Barclays said late last year that it plans to make key hires in wealth management across Asia as the British lender plots its return to some of the world’s fastest-growing economies after a 2016 restructuring.

Other banks including JPMorgan Chase and HSBC Holdings have also made a similar push into key private banking markets such as Singapore, Hong Kong and China over the past few years.