(Xinhua)
Updated: 2007-11-11 14:19

BEIJING -- The Bank of China's private banking clients will mushroom from several hundred to more than 1,000 in upcoming two years, Dr. Huang Jinlao, Marketing Director of Personal Banking Department of Bank of China (BOC), said here recently.

This translates into a total amount of 10 billion yuan (1.35 billion US dollars) wealth from the private banking clients to be managed by the country's second largest lender, he said in an exclusive interview with Xinhua.

It is the first Chinese-funded bank to provide domestic private banking services since March 28, 2007, targeting those with liquid financial assets above 1 million US dollars, after Citibank, Standard Chartered and other leading foreign-funded banks, striving to capture a bigger share of the country's increasingly large wealth management market.

The country has the world's fifth largest number of households with more than 1 million US dollars in liquid assets, trailing only the United States, Japan, Britain and Germany, according to a recent report released by the Boston Consulting Group (BCG).

The number of such Chinese households has come at 310,000 by the end of 2006, up from 124,000 in 2001, more than 48,000 of which have more than 5 million US dollars in liquid assets.

Given China's continuous and rapid economic growth, the report predicted the number to double by 2011, reaching 609,000.

Meanwhile, the number of wealthy families, those with financial assets worth 100,000 to 1 million US dollars, or people classified as China's middle class, is also expanding, according to the report.

BCG forecast the number of wealthy families in China would rise to 6.4 million by 2011 from current 3.25 million.

"It's quite possible that this wealth management market will increase at an annual rate more than 100 percent, as this market is relatively new in China," said Huang.

Before the BOC offers private banking service, it already had five years' experience in middle and high-end management and had 770,000 well-off clients as well as a team of more than 2,000 wealth managers.

"We can collaborate with our strategic partners like the Royal Bank of Scotland (RBS) and UBS to provide a wide array of customer-tailored personal banking services, including investment consulting, securities, insurance and others," added Huang.

Huang made clear his standpoint that the bank's advantages are "non-copieable in a short span of time" by its foreign and domestic competitors.

"Foreign-funded banks enjoy the advantage of more mature products, better-qualified wealth managers and top trustworthy brands," Dr. Ou Minggang, the Deputy Chief Editor of the Chinese Banker magazine, said.

While Chinese-funded banks had a larger group of clients and more outlets compared with their foreign competitors, he added.

The biggest bottleneck of Chinese-funded banks in providing private banking services is that they still lack enough experienced wealth managers, who should not only possess in-depth expertise, but also strong communication skills and trustworthiness, according to Ou.

"In the United States and European countries, the private banking managers are normally above 40 years old, in Singapore about 35, and in China around 30," said Huang.

However, Huang said that China's wealth managers would be growing mature together with the country's emerging private banking market in next five to 10 years.

Meanwhile, China Merchants Bank and China CITIC Bank opened offices last August to serve their private banking customers domestically to ensure their shares in the most lucrative banking service.

The Industrial and Commercial Bank of China, the country's largest commercial bank, and China Construction Bank were both in serious preparation for opening their domestic private banking services.