Merrill retains nearly all India clients

MUMBAI (Reuters) - The Indian wealth management arm of Merrill Lynch has retained nearly all its clients through the recent market turmoil and uncertainty created by a merger with Bank of America Corp (BAC.N), a top executive said on Monday.

Pradeep Dokania, head of global wealth management at the firm, said 99 percent of his wealthy clients were still banking with him, and Merrill expects to grow new assets in India by 20-25 percent over the next 12 months as a rebound in the domestic share market starts minting millionaires again.

"We have not lost clients," Dokania told the Reuters Global Wealth Management Summit in India at his office in the south of Mumbai.

"Our objective earlier was to give comfort when the market was having such uncertainty, and there was uncertainly within the firm because we got acquired by Bank of America," he said.

Now, with Indian shares .BSESN more than doubling from their lows in early March, clients have started to cut cash and are adding risk to portfolios from asset classes such as stocks and real estate.

"We are expecting growth of 20-25 percent in terms of new client assets," Dokania said, adding Merrill was looking to add at least 10 relationship managers to a team of 50 to help achieve the growth and tap new clients.

Indian wealth managers saw business stall in 2008 as a global credit crisis wiped out trillions of dollars of wealth globally.

In India, the number of wealthy fell by nearly a third to 84,000 in 2008, the fastest drop in the world after Hong Kong, as a 52 percent slump in domestic shares hurt the net worth of individuals.

By comparison, the world's rich lost a fifth of their wealth in 2008 and their number fell 15 percent as the financial crisis wiped out two years of growth, according to a Merrill Lynch/Capgemini report. Their wealth dropped below 2005 levels to $32.8 trillion.

However, the liquidity-led share market rebound this year, key to the financial health of India's newly rich created by a stock market boom between 2003 and 2007, is giving wealth managers confidence to jumpstart hiring and plan expansion.

"There was a period where clients got into a mode of paralysis," said Dokania, who has stayed with Merrill Lynch for more than two decades.

"The market context has changed. I think globally, also, where people perceive that the worst is over," he said, adding Indians were gradually adding risk, but were still not as euphoric as they were in the last quarter of 2007.

He said average cash levels had halved from levels seen earlier this year, but remained in double digits with many clients waiting for a share market correction to raise investments in stocks after missing a sharp rally since March.

Private banks generally shy away from disclosing their assets, but industry players say Merrill Lynch, India's Kotak Mahindra Bank (KTKM.BO), Deutsche Bank (DBKGn.DE), HSBC (HSBA.L), Standard Chartered (STAN.L) and BNP Paribas (BNPP.PA) are among the top wealth managers in India.

Merrill's wealth management business in India focuses on those with at least $1 million worth of investible assets.

(For the summit blog: summitnotebook.reuters.com/)

(Reporting by Nishant Kumar; editing by Ian Geoghegan)