Saeed Azhar, Reuters
Singapore: Merrill Lynch’s private bank in India will expand to cover at least 10 cities in the next three years, from five cities now, to take advantage of the country’s rising affluence, an executive said on Thursday.
“We are serious in building the business outside of the US and Asia is a key growth area for us,” Rahul Malhotra, head of Merrill’s Indian private client business, told Reuters in an interview.
“Within that, India is a very key focus area for us.”
India has some 83,000 millionaires, worth a combined $290 billion (Rs12,87,028 crore), according to the Merrill Lynch Capgemini 2006 Asia-Pacific Wealth Report, and is the second-fastest growing market in the world after South Korea.
Some of the biggest names in the wealth-management business, such as Citigroup and Merrill, are stepping up their private banking operations in India, where the market is estimated at around $600 billion.
Last month, Citigroup told Reuters that it plans to double the number of bankers dealing with wealthy non-resident and resident Indians from about 100 currently, by the end of 2008.
Citigroup has two private banking offices in India, and expects to triple the number by 2009. Its Smith Barney broking unit, which handles clients with assets of at least $1 million, plans to grow from one office now to a presence in 12 Indian cities.
Malhotra declined to reveal how many private bankers Merrill has at present handling resident and non-resident Indian clients.
“Clearly in three years, we will have presence in more than twice the number of cities and we would have more than roughly three to four times the number of branches,” said Malhotra, who joined Merrill from Citigroup last year.
Merrill has offices in Mumbai, New Delhi, Chennai, Bangalore and Kolkata, and operates in India as DSP Merrill Lynch Ltd, a 90%:10% joint venture between Merrill and brokerage firm DSP Financial Consultants.
The bank plans to open wealth-management offices in second-tier cities and expand in existing centres.
Malhotra said that Merrill has launched a private equity fund, aimed at wealthy non-resident Indian and foreign clients, that would invest in India’s Special Economic Zones. A similar rupee-based fund was also launched for Indian clients.
“Today if you want to participate in the real estate space in India you have to buy a property there in India. It is not an easy sort of proposition,” he said, adding that the private equity fund made it easier to invest in this asset class.
Malhotra said India’s wealth management market is fragmented, with no single bank having more than a 3% to 4% share.
For Merrill, Malhotra said the onshore Indian and non-resident Indian businesses are growing at a double-digit pace and business is expected to double in three years. He did not provide figures.