British fund manager Schroders (SDR.L) has applied for a banking license in Singapore as a first step to expand its private banking business to Asia from Europe, Asia Pacific CEO Lester Gray said on Friday. 

 

Schroders, which has full-fledged private banking operations in the UK, Switzerland and the Channel Islands, currently offers private client advisory in Singapore with a staff of around 20. 

 

Private banks have been expanding into Asia to tap the region's growing ranks of millionaires. 

 

Schroders will hire more people in Singapore after it receives a wholesale banking license from the Monetary Authority of Singapore that will allow it to operate as a private bank, Gray said without giving any numbers. 

 

“At some stage, we will grow the business outside of Singapore... We do see private wealth opportunities in the region as being greater than just Singapore although Singapore will be the regional hub,” Gray told Reuters in an interview. 

 

Swiss wealth manager Julius Baer (BAER.VX), which already has a large presence in Singapore, said in December it plans to grow its Hong Kong advisory business by getting a bank license, while Banque Heritage recently set up shop in Singapore, Asia’s largest wealth booking centre.

 

Schroders, which has about 12 billion pounds ($25.8 billion) in private banking assets under management, entered Asia's wealth management industry through its purchase of Commonwealth Bank of Australia's private client business in Singapore in 2008.  Schroders is a relatively small player in private banking but has a substantial fund management business in Europe. 

 

On the firm's core fund management business, Gray said Schroders already has a strong presence across Asia and any growth will likely involve expanding existing operations rather than setting up new offices. 

 

Schroders employs more than 600 people in Asia and manages about US$50 billion ($70.4 billion) of assets on behalf of Asian clients. It also has a fund management joint venture in China with Bank of Communications (601328.SS) which manages another US$11 billion. 

 

Gray said the greatest opportunity lay in creating and selling bond funds that provide investors with regular income as Asia's population is ageing, particularly in rich countries such as Japan and South Korea.  

 

He said Schroders is looking to add expertise in this area. 

 

“Demand for high-income, low-risk products is where we see high growth... Ten of billions of dollars of these products have been sold by the industry and will continue to be sold,” said Gray, who is also the chairman of the Investment Management Association of Singapore.