StanChart acquires Morgan Stanley's local wealth business

Deal valued at Rs 75 crore for assets of Rs 3,750 crore

Standard Chartered Bank will buy US-based Morgan Stanley’s domestic private wealth management business. The deal will be completed by the end of 2013, said Morgan Stanley.

The deal will boost Standard Chartered’s private wealth assets under management by 25 per cent or roughly $750 million (Rs 3,750 crore), a source in the know told Business Standard. The UK bank will buy Morgan Stanley’s private wealth business for about two per cent of its total assets, valuing the transaction at roughly Rs 75 crore, the source said.

A Standard Chartered spokesperson declined to comment on the financial details. Morgan Stanley officials also did not disclose the particulars. In an emailed statement, the Standard Chartered spokesman said, “The acquisition complements Standard Chartered Bank’s existing private banking onshore business in India.”  

Morgan Stanley said the private wealth management business represented less than five per cent of its India revenue in 2012. The US bank, which had surrendered its banking licence in India earlier this year, will continue to focus on its core institutional securities, investment banking and asset management businesses in the country, it stated.

Morgan Stanley employs about 400 people across businesses, including capital markets, equity and fixed-income sales and trading, research, asset management and private wealth management. It had set up the wealth management unit about five years earlier. Standard Chartered started its private banking business in India in 2007. Wealth management sector officials said Morgan Stanley’s private banking arm was one of the biggest in India but the business had turned unviable due to high costs and absence of commensurate revenues.

Many companies, including foreign investment banks, have been pruning or selling their wealth management business in India and Asia in recent months. Private banks, which came to India on the expectation that they would grow 20 per cent every year by servicing the nation’s growing rich, have been disappointed at the pace of growth.

In October last year, Switzerland’s Julius Baer Group announced the acquisition of Bank of America’s wealth management businesses outside America.

It is not clear whether Standard Chartered would absorb all of Morgan Stanley’s wealth management executives as part of the deal. Wealth management officials said it would be imperative for the UK Bank to retain the staff, as relationship managers will be important for bringing in a major chunk of the assets of Morgan Stanley’s wealth management division.

Earlier, L&T Finance, a unit of engineering conglomerate Larsen & Toubro, was in talks to buy out Morgan Stanley’s wealth management business. The talks fell through, as L&T did not agree on the price Morgan Stanley wanted, said a person familiar with the matter.
WEALTH SWAP

• Deal to be completed by end-2013
• Not clear if StanChart would absorb all of Morgan Stanley’s wealth management executives 
• This will be StanChart's second acquisition in the private banking/wealth management space in India
• It acquired American Express’ private banking business in 2009
• StanChart began a private banking business in India in 2007
• Earlier, L&T Finance was in talks to buy out Morgan Stanley’s wealth management business