Morgan Stanley Dean Witter Gets Go Ahead To Open Private Banking Arm In Hong Kong

Mary Swire, Tax-news.com, Hong Kong

16 March 2001

The Hong Kong Monetary Authority has granted a representative office licence to Morgan Stanley Dean Witter, enabling the private bank to open the first Asian office for its private banking arm in a bid to attract high net worth clients in the region.

The licence allows MSDW to take deposits and Alex Berner, executive director of MSDW in Hong Kong, said the new private banking section was confident of acquiring a sufficient market share in the current climate of increasing competition in the wealth management business in the region. He explained: 'We will basically acquire market share from the small players, and eventually they might have to go out of the market. Everybody now is jumping into private banking, but in this business if you don't have the critical mass it's impossible to survive.'

Private banking is proving to be a very popular trend for many of Asia's wealthy as they have been turning to their private bankers to help them to diversify their investments and protect their riches. Another major private bank, JP Morgan, recently highlighted this with its Asia-Pacific chief executive, Frederick Ma, explaining that before the 1997 economic crisis the majority of Asia's wealthy individuals kept their investment interests at a domestic level in the belief that the region provided the highest growth. He said: 'Our clients' investor mentality has changed a lot in the last couple of years. Immediately after the financial crisis of 1997, there was a panic to keep cash. But by 1998, people began to warm up to the idea of equity markets in the United States and wanted to diversify their portfolios.'

Mr Berner said MSDW will provide research and Internet services giving it a competitive advantage but he confirmed that the private bank is aiming at customers all over the Asian region and not just Hong Kong-based customers. He said: 'The focus will be very much outside of Hong Kong; banking secrecy is very important outside Hong Kong, in countries like the Philippines and Indonesia, where you have kidnappings, and people want to be very low key with their wealth.'

Michael Fung, head of the bank's private wealth management arm, said the bank has missed out on the Asian boom in wealthy investors and intends to play catch-up. 'We feel that we have been missing the big wealth,' said Mr Fung, 'so we will look at this as a product to capture the less active and more safe type of assets.' MSDW will open its new private banking office next week.

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