* To pay less than $5 mln on closure of the deal - sources
* Will buy 70 pct of MS India wealth management book -
* Wealth managers in Asia struggle to turn a profit
* Weak markets squeeze revenue, product offerings restricted
By Sumeet Chatterjee
May 20 Standard Chartered has agreed to
buy the Indian wealth management unit of Morgan Stanley,
helping the British bank expand its private banking business in
Asia's third-largest economy.
The sale underscores growing consolidation of Asia's wealth
management industry, which is struggling with rising regulatory
costs and wafer-thin advisory fees.
Morgan Stanley launched the sale of the Indian wealth
management business in November after entering the fiercely
competitive market about four years ago. The U.S. bank plans to
focus now on institutional securities, investment banking and
asset management in India.
The wealth management unit has assets under management of
around $800 million and Standard Chartered will buy about 70
percent of the book, two sources with direct knowledge of the
It will pay a little less than $5 million for the business
after closure of the deal in about six months' time, the sources
Standard Chartered and Morgan Stanley spokesmen contacted by
Reuters declined to comment on the details of the deal.
Standard Chartered launched its wealth management unit in
India in 2007. It manages about $3 billion worth of assets in
its Indian private banking business, making it one of the
country's biggest wealth managers.
The London-based bank has a stock market listing
in India and competes there with Royal Bank of Scotland,
Barclays, Citigroup and several domestic wealth
Competition has grown and weak markets have squeezed
revenue, with growth opportunities limited by regulations that
restrict product offerings.
Foreign players scrambled to enter the market a few years
ago and ramped up operations aggressively to take advantage of
robust economic growth, only to find themselves struggling.
The number of millionaires in India shrank by 18 percent to
125,500 in 2011, according to Capgemini and RBC Wealth
Management's world wealth report, marking the first decline
In the longer term, wealth is expected to grow steadily in
Asia, with relatively strong economic growth creating more
millionaires in India, China and across the region, a trend that
some foreign banks aim to harness.
Morgan Stanley said in a statement on Monday that the sale
of its onshore Indian wealth management unit would be completed
by the end of the year. The business accounted for less than 5
percent of its Indian revenue in 2012, it said.