The leading Canadian bank Royal Bank of Canada (RBC) seems set to be the latest of many Western banks to leave the Asian wealth management market in the face of tighter regulation and higher costs.
Several informed sources say that RBC has put the business under review and that a decision to sell seems likely in the coming months. RBC’s chief executive Dave McKay confirmed that a review is taking place but stressed that no firm decision has yet been taken.
It is thought that there would be no shortage of local suitors willing to take on the assets if a decision to sell is made, with the acquisitive DBS Bank and Bank of Singapore seen as prime candidates to buy the business. Such assets usually sell for around 1.5%-2% of assets under management.
RBC has less than US10bn of assets under management in the region, mostly in Hong Kong and Singapore. Revenues have fallen over the last couple of years and the business is much smaller than the bank’s wealth management business in North America.
A sale would be the latest of several such withdrawals by western banks, which are increasingly finding it hard to sustain the profitability they achieve from asset management in Asia that they do elsewhere. Last year ABN-AMRO sold its assets in the region to LGT Group and Bank of Singapore bought Barclays’ operations. UBS and Citigroup have also sold similar businesses, and further disposals are expected.