Standard Chartered in talks to buy Morgan Stanley's private wealth management business in India

Standard Chartered is in talks to buy Morgan Stanley's Indian private wealth management unit, Reuters yesterday reported, citing two people with direct knowledge of the situation.

The unit manages approximately $1 billion, including loans. Although it was not immediately clear what the price tag might be, the news agency quoted one of the sources as saying that the wealth management units in India get bids at 1.5 per cent to 2 per cent of the assets under management.

A formal bidding process is expected to start soon and a couple of Indian financial services companies have also shown interest in the asset, the report added.

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 themselves struggling, said the report.