Morgan Stanley to sell Indian wealth management unit to Standard Chartered

Standard Chartered Bank LogoUS multinational financial services firm Morgan Stanley today signed an agreement to sell its Indian wealth management unit to Standard Chartered for an undisclosed sum.

"Morgan Stanley will work closely with Standard Chartered over the coming months to ensure a smooth transfer of our wealth management clients currently serviced in India," the New York-based bank said in a statement.

Morgan Stanley is selling the business after conducting a review of its operations. The unit employs more than 400 people and accounts for less than 5 per cent of its Indian revenue.

The unit manages approximately $1 billion, including loans. Although it is not immediately clear what price Standard Chartered has paid for the acquisition, analysts have earlier said that wealth management units in India are generally valued at 1.5 per cent to 2 per cent of the assets under management.

Morgan Stanley entered the highly fragmented and competitive Indian market just four years ago and the sale is part of the bank's efforts to withdraw from subscale wealth management operations globally.

The bank's India unit sale underscores a growing trend of consolidation in Asia's wealth management industry as private banks struggle to earn profits due to rising regulatory costs and low advisory fees.

India is a particularly difficult market for wealth managers as cut-throat competition, high staff costs, weak markets and limited product offerings have squeezed fee revenue.

Many foreign players had scrambled to open up shop in India a few years back to take advantage of robust economic growth, only to find them later struggling.

The sale is expected to be completed by the end of 2013.