Hong Kong’s family office hub ambitions spawn private banking opportunities: Citigroup

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  • Half of the Asia-Pacific family offices served by Citigroup will face a succession event in the next five years
  • Family offices in Hong Kong, Asia are relatively younger compared to those in Europe and US, seek ‘more education on succession and wealth planning’: Citigroup

China’s ultra-rich are flocking to Hong Kong as it reaffirms its position as a wealth management and family office hub for Asia, offering significant private banking opportunities, according to top executives at Citigroup.

Half of the family offices served by the banking giant are going to face a succession event in the next five years, according to Alex Monnier, the global head of family office advisory at Citi Private Bank.

“Hong Kong and broader Asia family offices are relatively younger compared to those in Europe and US and thus seek more education on succession and wealth planning,” he said in an interview with the Post.

Jane Fraser, in one of her first remarks as CEO of Citigroup, spoke about the bank’s plans to refocus its efforts on wealth management outside the US across four strategic hubs in Singapore, UAE, Hong Kong, and London.

Citi Private Bank’s global family office group serves around 1,800 clients with an average net worth of US$2.1 billion. It estimates US$100 trillion of wealth creation will take place across the world over the next 10 years, with the highest rate of growth in Asia.

An estimated US$2.5 trillion in intergenerational wealth is expected to have changed hands across Asia by 2030, according to wealth research institute Wealth-X.

Hong Kong has the opportunity to showcase the importance of not only being an investment centre, but also a place for family offices to seek advice. Unplanned succession is the main reason family offices break down, said Monnier.

“Without addressing family governance, you run the risk of having a family that is highly financially successful, but highly unstable from a family unity and continuity standpoint,” he added.

Citigroup’s plans emerge at a time when Hong Kong’s government is on a drive to attract more family offices to the city. Under this campaign, the government has launched the Financial Mega Event Week, which will include a two-day event for global family offices under the Wealth for Good Summit.

“Events like Wealth for Good are reviving the whole energy around Hong Kong as a key investment hub, with all the ecosystem plugged into the Greater Bay Area for international investors,” said Bernard Wai, Asia-Pacific head of Citi Private Bank Global Family Office Group.

Diversifying one’s asset holdings is critical for achieving a more stable return on investments particularly in the present market environment.

“We are living in a world where diversification will be very vital,” said Wai. He has seen many family offices in Hong Kong chase the investment momentum being experienced in India, Japan and US stock markets, while disagreeing that family offices were withdrawing investments from Hong Kong or China.

“Hong Kong and China will experience less momentum than before. But are people taking their investments away from China? No,” he said.

Another new trend among family offices is the increased interest in impact investing – investments made in philanthropic and environment-related areas.

“[Family offices] want to align their investments with their values and they blur the lines between philanthropy and sustainable investing,” said Monnier. “They see them as different ways to achieve the same goals. I think that is what the future will bring.”

Events like the Financial Mega Event Week are also leading to an increased uptick in enquiries from investors about how to set up bases in Hong Kong and what are the investment opportunities in the Greater Bay Area.

The number of family offices in Hong Kong is estimated to have exceeded those of major financial centres in the region, according to a government study earlier this week.

Hong Kong had 2,703 single-family offices at the end of 2023, according to data published by Deloitte, which manage US$10 million to US$100 million of assets each on average. The research was commissioned by InvestHK, a government promotion agency.

“Low tax, no inheritance tax, no capital gains tax, and all the other special tax concession, along with the abundance of professional personnel, are all the sort of things that make Hong Kong very attractive,” said John Wong, PwC’s partner in charge of mainland China and Hong Kong family business practice.

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