China Merchants Bank Private Banking
One of the first joint-stock commercial banks to start private-banking operations in the country, China Merchants Bank has established itself as a market leader over the years. That makes it all the more impressive that the bank was still able to expand its presence in 2019.
The number of CMB’s private-banking clients exceeded 81,000 at the end of last year, with total assets under management (AuM) over Rmb2.23 trillion ($320 billion); both up about 10% over 2018.
On top of a national network of 140 private-banking centres, CMB also managed to leverage its offshore entities China Merchants Bank Hong Kong, CMB Wing Lung Bank and China Merchants Bank International to build a best-in-class cross-border investment platform that was able to meet the growing needs of China’s high net-worth (HNW) clients for offshore exposure.
While most of its competitors still rely heavily on their retail network – the traditional route to a private-banking client base in China – CMB has explored other channels to maintain or even accelerate growth in recent years.
This includes using a number of online platforms to acquire potential clients, developing specific programmes to target shareholders of pre-IPO companies and increasing the focus on higher-spending credit-card holders.
These methods helped the bank add more than 8,000 new HNW clients in 2019.
But growth is not the only focus for CMB, which is mindful of the shifting domestic wealth landscape.
The wealth management market in China is changing: entrepreneurs from trade and industrial sectors, after years of capital accumulation, are now planning the transfer of wealth to the next generation.
In response, CMB has been growing its family-trust business, which was up almost 50% by AuM in 2019, while exploring new family-trust models such as equity family trusts, staff incentive trusts and investment-right-reserved family trusts. It also managed to expand its family office business, looking to serve clients with over Rmb3 billion.
The CMB group is known for its savviness in technology, and that innovative spirit is reflected in its private-banking business too. It is a worthy winner of our best private bank for innovation in technology award.
CMB Private Banking is one of the few Chinese players to launch a global asset allocation system, used for risk management, portfolio management and asset allocation, and localized by CMB to suit China.
It has developed a global hotline service so that private bankers can carry out instant transactions for clients from any location.
The increasing demand from existing HNW and ultra-HNW individuals to preserve and transfer wealth, coupled with the rise of the new rich in China – such as startup owners and professionals, who are less aggressive in their investment strategies – has led to a change of mindset for Chinese private banks.
CMB has been at the forefront of every trend in the ever-changing China market, with custom-made wealth management plans to suit the shifting needs of its clients. That willingness and ability to adjust will likely ensure that the bank leads the domestic private-banking competition for years to come.