Wealthy Indians have $50 bn to invest

Barclays Wealth says private bakers have tapped just one-fifth of investable wealth with HNIs

MUMBAI:  He was ICICIdirect’s second core hire in 2000, just before the online equity trading platform was launched. Now, he is busy setting up the private banking division of UK-headquartered Barclays in India.

From servicing retail clients at ICICIdirect, to high networth individual (HNI) now, the transformation seems to be complete for Satya Narayan Bansal, chief executive for Barclays Wealth, India.

“We believe that the Indian HNI market is under-penetrated. Most conservative estimates indicate a size of $50 billion in terms of investable assets, and our estimate suggests that private bankers have tapped just about a fifth of this,” says Bansal, explaining the rationale for Barclays Wealth’s entry into India. Globally, the firm manages assets worth £126.8 billion.

The Capgemini-Merrill Lynch World Wealth Report says that Indian HNIs’ wealth stands at $350 billion. So why the discrepancy between this estimate and the Barclays estimate? “We have taken into account only the investable wealth, and not wealth that remains locked in, let’s say in a business, and which cannot be managed by a private banker,” clarifies Bansal.

Barclays Wealth hopes to start full-fledged operations in India by the middle of 2008, and Bansal has been busy putting in place a team, products and infrastructure.

He admits that talent will be a crucial obstacle in his plans, but outlines efforts on how he hopes to surmount it. “We may hire people from the industry but we’re looking at lateral hires as well, from sectors such as corporate banking, SME banking, insurance and equity broking,” says Bansal. The plan is to put them through an extensive training and induction programme.

“Our plan is also to leverage our global expertise for our Indian clients.” As in all other markets “the focus of HNIs is on three factors: how to preserve the wealth he already has, how to grow what has been preserved, and how to transfer this in a secure and efficient manner to the next generation,” says Bansal.

On this last point, of succession planning, Indian laws have not been too favourable for private bankers, with the Indian Trust Act being rather archaic.

But Bansal is confident, and feels that the regulations related to this will only become more conducive as time goes by. “Of late, there has been a great focus on regulations. It is only a matter of time before the regime becomes more favourable for us to operate,” he said.

So what’s the psyche of a wealthy investor? What makes him tick?

“Wealth is much beyond what one has in financial assets. Wealth is measured by the power, prestige and influence (PPI) it wields. Therefore, whether one is wealthy or not will depend on the social, cultural and business context in which one operates,” says Bansal.

Barclays recently brought out a study which says that the global threshold of wealth has increased. “The term millionaire - once almost a gold standard of wealth - has lost its cachet in a world that is experiencing a wealth boom,” says the report.

More than a third of the respondents - 790 individuals with assets of at least $3 million - to the survey, based on which the report was published, said that you need at least $10 million to be wealthy.

With wealth being a relative concept, Bansal feels that in a city like Mumbai, one probably needs to have $10 million to feel wealthy. “But in a smaller city, you probably consider yourself wealthy even if you have a million dollars,” he says. Bansal’s challenge over the next few years would be to manage the expectations of his “wealthy” clients, whether they be in Mumbai or Tirupur.

sanat_vallikappen@dnaindia.net