The bank announced the closure in a statement. The closing of the Hong Kong branch includes its private banking and asset management businesses.
The Swiss firm, which managed CHF163bn (£127.8bn, $160.2bn) globally as of end-June, declined to give more details about when it is closing its Hong Kong branch and what it plans to do with the assets it is managing in the Special Administrative Region (SAR).
The closure is a turnaround from the firm’s fairly recent ramp up of its Asia business.
Rothschild, which has been present in Hong Kong for 20 years, had been expanding its private banking business there. In 2014, the firm hired six bankers and advisers and said at the time that it planned to significantly grow its private banking business in Asia.
The firm’s former chief executive, Monique Chan, quit in May last year and joined BMO a few months later as chief executive for its private banking business in Asia. Chan was responsible for developing both Rothschild’s private banking and asset management business in the region.
Rothschild will continue doing business in Asia through selective partnerships in the region, such as those it has with SMBC Nikko Securities and Samsung Asset Management, according to the statement.
The private bank’s partnership with Samsung involves Rothschild acting as a fund advisor to Samsung’s European high-dividend fund, while Samsung distributes Rothschild’s flagship European convertible bond fund in South Korea.
In 2005, Rothschild formed an alliance with Nikko Cordial Securities, which was acquired by Sumitomo Mitsui Banking Corporation in 2009, to provide private banking services to Japanese HNWIs.
Besides Hong Kong, Rothschild has an office in Beijing with asset management and private equity businesses, according to the firm’s website.
Turmoil in private banking
Private banking and wealth management firms have been attracted to the growing pool of wealth in Asia, but have found it difficult to replicate the discretionary business in Europe and to gain traction, Mark Wightman, EY’s Singapore-based partner for wealth and management advisory, said in an earlier interview with our sister publication FSA.
Regulatory requirements have also increased, adding to bank operational costs.
A number of banks have streamlined their operations during the past year by selling off Asia wealth management units.
The Rothschild announcement came days after Dutch bank ABN Amro sold its private banking operations in Hong Kong, Singapore and Dubai, totalling $20bn in AUM, to LGT.
In late-November, Bank of Singapore announced that it has completed the acquisition of Barclay’s wealth and investment management business in Singapore and Hong Kong.
ANZ sold its Asian wealth management and retail units for a loss to DBS in October. Singapore-based DBS, the largest bank in Southeast Asia, also bought the private banking activities of Societe Generale in Singapore and Hong Kong in 2014.
DZ Privatbank, also in October, shut its branch in Singapore and referred its clients to Bank of Singapore with no financial exchange, according to a BOS statement.
In April, UBP closed the acquisition of Coutts’ wealth management operations in Hong Kong and Singapore, which brought $9bn to the bank’s platform.
Union Bancaire Privée’s private banking Asia chief executive Michael Blake told FSA recently that he believes the consolidation trend will continue.
“The industry is at an inflection point where it is necessary for banks to demonstrate commitment to the region and be clear about core strengths. We are already seeing much greater differentiation within the industry, with universal, regional and boutique banks offering a more distinct proposition to clients.
“Private banks that are in the `squeezed middle’ — those for whom wealth management is a small or non-strategic part of their overall business — will remain under pressure as financial institutions refocus on core business lines and markets,” Blake added.
