HSBC says has looked at ING private bank

SINGAPORE (Reuters) - HSBC (HSBA.L) has looked at ING (ING.AS) private banking units in Asia and Switzerland, the head of its private banking business said, describing the proposed sale by the Dutch bank as a rare opportunity in Asia.

This was the first time HSBC publicly confirmed that it has eyed ING's private banking assets, which is the most significant deal in the wealth management industry since the onset of financial crisis.

Chris Meares, CEO of HSBC's global private banking, said the private bank's main business strategy for growth is organic, but the financial crisis is creating opportunities for acquisitions as valuations for private banking assets have shrunk.

"What's attractive (about ING) is that you never see these businesses come up for sale," he told the Reuters Wealth Management Summit in Singapore, but declined to comment if HSBC is still in the running to buy ING's private banking units.

"It's really the rarity of a business, you know, coming off for sale -- 150-odd relationship managers and the assets under management... It is very unusual for people to sell an Asian business."

Sources familiar with the deal have told Reuters that HSBC is the favorite to buy ING's Asian assets, while Julius Baer (BAER.VX) is the front-runner for the Swiss assets.

Meares, who has been with HSBC for three decades, said the price of private banking assets have come down to as low as 1-2 percent of assets, compared to 5 percent before the financial crisis struck in 2007.

"There is no doubt with the industry profits coming down, valuations have got a little better, become more interesting at least for a buyer."

However, Meares said some growth assets such as those in Asia could still command a price of 2-3 percent of assets under management.

HIRING BANKERS

He said HSBC has started to hire bankers after it took some "corrective" actions at the start of the year. It has 7,000 staff globally including 1,800 in Asia.

Meares said HSBC could boost its global headcount by a single-digit percentage next year after flat growth this year and 10 percent increases in the years before the crisis.

"We've been growing our headcount. Until last year we were growing about 10 percent per annum which actually for a big business is a lot of people," he said.

"I don't think we will add 10 percent to our global workforce next year, but we will certainly add a few percent."

HSBC managed about $430 billion in assets including trust assets, he said, adding it is the world's fifth-biggest private bank.

Meares said HSBC wants to grow its business in the large Asian economies of China and India, expand in Brazil and Mexico as well as in the Middle East.

He said the outlook for the private banking business is improving because risk appetite is coming back amid a rally in financial markets.

"What we are seeing is activity picking up, but we still see a lot of competition in deposit rates offered by various people, so you'll still see margins under pressure," Meares said.

But he added HSBC Private Bank's fee income has begun to recover as the rebound in financial markets has boosted assets under management and clients have started to trade more actively.

Analysts said profits of private banks have been hurt because clients are choosing simpler products after getting burned from toxic derivatives last year.

"Private banks' profitability is certainly affected as the margins are smaller with plain vanilla and relatively less risky products," said Yap Chee Meng, regional head of financial services at KPMG Asia Pacific.

(Additional reporting by Neil Chatterjee and Jean Yoon; Editing by Muralikumar Anantharaman)