Banks take to wealth management as treasury income shrinks

The wealth management business has become a focus area for many new generation private sector banks as they look at new business avenues to shore up fee-based income. The trend is a result of the fall in treasury income.

UTI Bank, Centurion Bank and IndusInd Bank are among the private sector banks which plan to enter this segment on a larger scale. ICICI Bank and HDFC Bank are already established players in the wealth management space.

ICICI Bank is the largest player in this segment with assets worth above Rs 20,000 crore under its management.

"ICICI Bank offers a whole range of services to its customers such as investment advise, online trading facility, real estate advise and other services," said Arpit Agarwal, head, private banking, ICICI Bank.

"The income from the core banking business is under pressure and banks are looking at new business segments like wealth management to shore up income," said Abhay Aima, country head - equities and private banking group, HDFC Bank. Currently, HDFC Bank has assets under management in excess of Rs 6,000 crore.

"We also plan to provide art advisory services in due course to our high networth clients," he added.

UTI Bank will roll out its wealth management business in July. Currently it offers priority banking services to its customers who maintain a minimum balance of around Rs 5 lakh in fixed deposits and Rs 1 lakh in savings account.

The bank's high networth clientele has a deposit of over Rs 2,500 crore with the bank, which manages assets in excess of Rs 8,000 crore.

UTI Bank provides third party products like mutual funds and insurance to its customers under the priority banking services, said the bank's senior vice-president, retail banking, Hemant Kaul.

"We plan to provide portfolio management services, advice on real estate investments and art investments," said Kaul.

Similarly, IndusInd Bank offers wealth management services to its high-end customers through the sale of third-party products. However, it is exploring tie-ups with overseas players to increase the gamut of services it can offer to high networth individuals (HNIs).

IndusInd Bank has a non-resident Indian (NRI) clientele base of 10,000, most of whom are HNIs, said a bank official.

"Apart from remittance business into the country, NRIs are looking for portfolio management services including stock broking, arbitrage opportunities between foreign currencies, which we as a bank cannot offer today," the official added.

Once IndusInd Bank sets up the capital market subsidiary, it will be able to grow the NRI business.

Many HNIs are also attracted to commodity trading. HDFC Bank proposes to set up a specialised desk to provide advisory services to these clients, said PV Ananthkrishanan vice-president & head - capital market & correspondent banking services at the bank.