Ill-conceived sales of financial products to wealth management customers could be the next headache for the nation's banking sector after the current problem of credit and cash card bad debt eases, a HSBC executive said yesterday.
The situation is attracting attention as financial institutions turn their focus to clients at the top of the wealth pyramid as the low end of the market suffers from bad loan problems.
But Martin Spurling, deputy chief executive officer and head of personal financial services at HSBC Taiwan, said some financial advisory specialists might have rushed to step up their sales of financial portfolios as the investment market booms.
In doing so, these specialists could be making the mistake of neglecting proper advance assessments of customers' financial capacities, Spurling said.
The consequence of such irresponsible selling, however, was expected to surface only once the market had settled, he added.
Spurling made the remarks on the sidelines of a HSBC press conference that was called to re-launch its wealth management business yesterday.
At the end of last year the bank obtained a license from the financial regulator, which has started enforcing stricter wealth management guidelines.
The wealth management business targets customers who have NT$3 million (US$93,600) in assets available for investment.
In Taiwan, this market is estimated at around NT$20 trillion and is expected to grow by 14 percent annually until 2011, according to figures from HSBC.
Taiwanese place up to 80 percent of their assets in time deposits, compared with a ratio of 30 percent for individual portfolios in developed countries, the figures showed.
Taiwan will be the second-largest mutual fund market in Asia after Japan, with a compound annual growth rate of 17 percent within the next two years, the bank said, citing figures from Cerrulli Associates.
All of these statistics suggested that there were opportunities for the bank to provide customers with sophisticated financial planning services, HSBC said.
The bank entered the nation's wealth management market as a pioneer among foreign banks around two-and-a-half years ago.
But the wealth management market only began to boom around the middle of last year, when a group of foreign banks, including UBS, BNP Paribas and ABN AMRO Bank, rolling out individual portfolio management services.
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