Indian private lender Yes Bank Ltd. is exploring entering the country’s fiercely competitive $1 trillion wealth management space following its strategic partnership with Japan’s Sumitomo Mitsui Banking Corp.
“Wealth is an area we’re seriously considering,” Yes Bank’s Chief Executive Officer Prashant Kumar told Bloomberg News in an interview. “SMBC’s backing gives us the confidence to explore this space.”
The push into wealth management comes as the Indian lender deepens its ties with SMBC, Japan’s second-largest lender by assets, which completed its acquisition of a 20% stake in Yes Bank this week.
India’s cohort of wealthy individuals has surged over the last five years, thanks to robust equity market returns, real estate transactions, stock market listings and private equity investments. Rising salaries among the urban elite has many wealth managers opening their doors to the nouveau riche in a bid to grow their market share.
Competitive Landscape
Yes Bank is up against the country’s leading private banks such as ICICI Bank Ltd., Kotak Mahindra Bank Ltd. and Axis Bank Ltd., whose wealth arms cumulatively manage about $330 billion of assets, according to Asian Private Banker. Non-bank players like 360 One WAM Ltd., Nuvama Wealth Management Ltd. and Blackstone Inc.-backed ASK Group — which collectively manage around $100 billion — too are expanding beyond India’s metropolitan centers to woo high networth individuals.
Knight Frank estimates that India has just under 85,700 individuals with a net worth of over $10 million, trailing US, China and Japan. Assets under management at wealth firms and private banks are expected to more than double to $2.3 trillion between 2023 and 2029, according to a Deloitte report.
“With rising affluence, especially among younger demographics, there’s a clear opportunity,” Kumar said. “It’s a long-term play requiring distribution, product diversity, and expertise.”
The race to grow assets and acquire new clients has wealth managers offering extravagant pay packages to experienced private bankers.
Over the next three years, Yes Bank plans to finalize a joint strategy with SMBC, with a focus on scaling up existing operations and investing in new growth verticals.
SMBC, which been looking to expand its footprint in India, is looking to buy an additional 4.2% stake in the bank from an affiliate of Carlyle Group for 51 billion yen ($345 million).
Yes Bank, which is targeting 10%–12% loan growth for this fiscal year, is also planning to add 400 new branches over the next five years. A fifth of that is expected in the current financial year alone, Kumar said.
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