Some private banks in Asia are gearing up for recovery but firms must still address a loss of client confidence in the industry.

As we enter the first period immediately after the financial crisis there are two main themes in the Asia-Pacific’s private banking industry.

Firstly, some providers are re-skilling, re-hiring and acquiring while others are licking their wounds and retiring hurt. There were always going to be winners and losers in a crisis like the one we’ve seen and so it has proved.

RBS and ING are the two most notable casualties there as we watch the likes of Credit Suisse, Barclays and ANZ – to name a few – hit the acquisition trail. More will be revealed when the sale of ING’s private banking assets is complete, and the buyer is known.

The second theme, and one of equal importance, is the ongoing crisis of confidence among clients in the services and abilities of their private banking providers. So much wealth has been wiped out, so much advice has proved to be so wrong that it is little wonder that high net worth individuals around the region are re-evaluating their private banking relationships.

As SocGen’s head of private banking for Singapore and South Asia, Pierre Baer, told a Foreign Correspondents Association briefing in Singapore recently, Asia’s wealthy are still market shy despite the recent rallies, and cash is still king. “The fear factor is there for everyone,” he said.

But clients are not just wary of the market, they are wary of private bankers as well.

Few in the region would be unaware of the acrimonious lawsuit brought by Singapore businessman Oei Hong Leong against Citibank, where he had been a private client for 30 years. He blames $1 billion in forex losses on a lack of reliable information from the bank, a claim Citi is refuting, saying that as a sophisticated investor, this man was responsible for his own decisions. 

Regardless of one’s point of view on this issue, and regardless of the outcome of the legal action, the Oei case is the very public example of client disenchantment.

The case of former private banker Ian Flynn Tessensohn, jailed for six and a half years for siphoning $3.5 million from a client’s account, has only added to the sense of disillusionment about the profession, putting private bankers down there with car salesmen, and even journalists, in the public mind.

Many high net worth investors are more inclined today than they were two years ago to take control of their wealth management and do it themselves, figuring they can scarcely do any worse. The huge move towards self managed retirement funds in Australia, the fastest growing area of the country’s pensions industry, is a good example of that.

A PricewaterhouseCoopers survey from earlier this year showed that a fifth of the Asian banks surveyed had lost more than 25 per cent of their client assets. Globally, the average is that 10 per cent of banks saw client assets decline by as much.

So, how can the industry respond, and is it doing so? At first glance the two main current themes in the regional industry might seem unrelated, but there something in all the acquiring and hiring that is partly about regaining client trust?

Getting fresh new people and more of them; restructuring, growing by acquisition: all this is one way of reaching out to clients to tell them things have changed, and that they are in safe hands again. It is also a way to take advantaged of the high levels of customer churn.

A glance at some of the recent moves shows some big statements by some main players such as Credit Suisse, Barclays and Citi.

Barclays has hired a 10-strong team from UBS. Credit Suisse has added nine staff to its Asia-Pacific fixed income sales and trading teams. The hirings and new appointments have continued at Citi, where Debashish Dattagupta has been named Asia Wealth Management head.

Meanwhile, the interest in the ING assets from a list of six interested bidders including DBS, Julius Baer, Standard Chartered and even Australia’s CBA have illustrated again that, for some players, the fallout from the crisis has brought opportunities.

As SocGen’s Pierre Baer told journalists in Singapore recently, the bank still has confidence in the Asia Pacific wealth management market, which he sees overtaking North America by 2013. 

Its one thing to have confidence in the industry, but the industry first has to regain the client’s confidence in its ability to deliver. Perhaps we are seeing the first steps in that process now.