BMO looks for China wealth management buys

HONG KONG (Reuters) - Bank of Montreal BMO.TO is seeking acquisitions to complement its wealth management business in China, a senior executive said on Thursday, raising the stakes further in the already crowded sector.

A Bank of Montreal sign is pictured in downtown Ottawa March 3, 2009. REUTERS/Chris Wattie

The bank also intends to almost quadruple its staff in Asia to under 1,000 from about 250 currently, BMO’s President of its Asian operations Albert Yu said in an interview.

“I don’t believe the Asian financial industry is saturated,” Yu said. “The market is huge and growing quickly, and I believe it is big enough to absorb new players even if there are one or two sectors that are overheating.”

Many foreign banks looking to diversify outside of their slow-growing home markets want to expand in China and other emerging markets such as India, triggering a bidding war on salaries for talent in the sector.

Singapore's OCBC OCBC.SI $1.5 billion purchase of ING Group NV's ING.AS private banking unit in Asia was the last major acquisition involving the wealth management sector, with most banks lying low since then.

Many of these banks, including rivals such as ANZ ANZ.AX and DBS DBSM.SI, have said they intend to target the wealth management business in Asia, where the number of millionaires jumped 26 percent last year.

The bank faces the greatest difficulty filling its operations and support departments especially in the areas of compliance and risk control, said Yu, a former derivatives trader who moved to Beijing last year to head the bank’s Asian operations.

“Front line people are now becoming a money game,” he said. “The more you’re able to pay, the more you’re able to hire, so we’re really looking for individuals who are convinced by our growth plan here in Asia.”

The private equity and M&A sectors were two areas that Yu identified as overheating, although robust Chinese economic growth will likely help absorb any excess capacity in the future.

“There are not enough big deals out there to support everyone in those two sectors,” Yu said. “That is some concern, but as long as China keeps its GDP up at above 8 percent each year, it’s not that difficult to absorb the excess capacity.”

HSBC HSBA.L0005.HK said last week that fast-growing emerging markets could face some "bumps in the road" ahead, raising concern about the sustainability of the current fast growth seen in the region.

BMO became the first Canadian bank to incorporate in China earlier this month, and it has said that it wants to focus on wealth management and trade financing to grow its business in Asia.

Editing by Jacqueline Wong