StanChart in talks to buy Morgan Stanley India wealth unit

Standard Chartered LogoBritish lender Standard Chartered Plc is in late-stage talks to buy Morgan Stanley's Indian wealth management unit, Bloomberg today reported, citing two people familiar with the discussions.

Standard Chartered, which focuses on Asia, will initially pay $8 million for the unit, which has about $800 million of assets under management, the report said, and added that the London-based bank will pay an undisclosed sum later.

New York-based 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 was not immediately clear what the price tag might be, analysts have earlier said that wealth management units in India would attract bids 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.