The Indian wealth management unit of Credit Suisse hopes to double assets in each of the next three years as it triples its headcount and tap the very rich in a fast-growing market, a top official said.
Puneet Matta, a former Citigroup executive who now runs the Credit Suisse arm, said the bank’s focus on serving the very rich — individuals with investable assets of $3 million or more — had so far paid off in India and positions the firm well in the rapidly growing and competitive wealth management industry.
“We are more than doubling (assets) every year,” Matta said.
“I expect that we will continue growing at a similar growth rate over the next two, three years.”
He said client portfolios had outperformed India’s benchmark BSE index since launch of the Credit Suisse business in May 2008. The index is up about 3 percent since then.
An advisory based business model is also helping the firm in India, the Mumbai-based executive said, where fees are linked to assets under advisement rather than product class.
Most wealth managers in India have shifted to an advisory based model, partly after the global wealth management industry was accused of selling toxic investments to rich clients for high fees.
The firm has attracted talent from rivals such as Kotak Mahindra Bank, Citigroup, Merrill Lynch and HSBC to form a team of 50 staff.
Matta said he had plans to expand the headcount by 150-200 percent by the end of 2012.
Indian wealth managers are on a hiring spree and reviving expansion plans as a rebound in domestic shares starts to mint millionaires again, creating fertile hunting ground for clients.
A buoyant stock market nearly doubled the number of billionaires in India, to 52 in 2009 from 27 in the previous year, just two short of the record in 2007, according to the Forbes’ Rich List in November.
Credit Suisse joins the likes of Standard Chartered, Morgan Stanley, HSBC and Barclays who between them plan to hire hundreds of bankers and open new offices across India.
But expansion is not easy as homegrown wealth managers had a head start and some local newcomers are poaching top talent as the battle for clients’ wallets in the world’s second-fastest growing market for millionaires intensifies.
Merrill Lynch-Capgemini, in its annual report on wealth, said the combined wealth of Asia Pacific’s high net-worth individuals (HNWIs), or those with investable assets of over $1 million, would grow at an annual rate of 8.8 percent until 2018, faster than the global average of 7.1 percent, with China and India likely to lead growth in Asia Pacific.
Consultant Bain estimates India has around 115,000 high net worth individuals, fewer than 20 percent of whom have financial advisers.
Credit Suisse’ main clients include entrepreneurs and self-employed professionals, many of whom are first-generation millionaires created by a stock market boom between 2003 and 2007 and strengthened by a revival since the first quarter of 2009.
Matta, an avid golfer and adventure sports enthusiast, said his firm differentiates its from many of the local rivals by helping the very rich with their businesses.
“Our approach is not just managing liquidity but also working with the liabilities and also with illiquid assets,” he said.