By Sumeet Chatterjee
MUMBAI Feb 27 Standard Chartered Plc
is in talks to buy Morgan Stanley's Indian private wealth
management unit, which manages about $1 billion including loans,
two sources with direct knowledge of the situation said on
A couple of Indian financial services companies have also
shown interest in buying the wealth management business, and a
formal bidding process is expected to start soon, one of the
sources told Reuters. The source did not name the companies.
Both the sources declined to be named as they are not
authorised to speak to the media.
Asia-focused Standard Chartered, which is also
listed in India, and Morgan Stanley declined to comment, when
contacted by Reuters.
Morgan Stanley launched the sale of its Indian private
wealth management unit in November last year, after entering the
highly fragmented and competitive market about four years ago.
The sale of the unit underscores a growing trend of
consolidation in Asia's wealth management industry as private
banks struggle to earn profits in the face of rising regulatory
costs and wafer-thin advisory fees.
Standard Chartered, which has a strong presence in corporate
and retail banking in India, is also one of the biggest private
wealth managers in Asia's third-largest economy based on assets
In India, the London-based bank competes with global banks
including Royal Bank of Scotland, Barclays and
Citigroup as well as a host of domestic financial firms in
the wealth management business.
The top private banks in India have between $1 billion and
$2 billion of assets under management each, industry sources
say. Standard Chartered had launched its wealth management unit
in India in 2007.
India's L&T Finance Holdings, a unit of leading
construction and engineering group Larsen & Toubro,
was in talks to buy Morgan Stanley's Indian wealth management
business, the local media had reported last month.
It was not immediately clear what the price tag might be,
but one of the sources said wealth management units in India get
bids at 1.5 percent to 2 percent of the assets under management.
This can go up or down depending on the quality of the book,
the source said.
India is a difficult market for wealth managers. Cut-throat
competition, high staff costs and weak markets are squeezing
revenue, while growth opportunities are limited by regulations
that restrict product offerings.
Many foreign players had scrambled to open up shop in India
a few years back and aggressively ramped up operations to take
advantage of robust economic growth, only to find themselves
The number of millionaires in India shrank 18 percent to
125,500 in 2011, according to Capgemini and RBC Wealth
Management's world wealth report, marking the first decline