The Asia-Pacific region is producing millionaires at a faster pace than other global regions, raising a tough challenge for private banks in seeking to meet demand adequately, particularly as the region’s market contains wide differences, according to the chief executive of BSI Bank Asia.

“While there is no empirical evidence to suggest clients in Asia are more demanding of  tailored services and conflict-free advice than those in any other part of the world, the diversity of Asian cultures demands that banks offer unique strategic responses to the concerns and interests of each client,” Hanspeter Brunner said in a signed article for the Financial Times.

“The factors that drive the asset management or financial planning for a wealthy client are – or at least should be – quite different in Singapore, Hong Kong, India, Indonesia or any given market,” Brunner said.

This is not the first time that the CEO of the Swiss-based bank has warned about the challenges that come with a rapidly expanding wealth market. Last December, he said that competition for private bankers in Asia will reduce profit margins at wealth-management firms as more companies enter the market over in the next few years. Cost-to-income ratios at private banks in Asia, typically between 70 per cent and 80 per cent, will be close to the high end of that range in the next few years.

According to last year's Merrill Lynch/CapGemini World Wealth Report, of all global high net worth individuals' holdings, 22 per cent was dedicated to Asia-Pacific in 2009, up from 19 per cent in 2008. Asia-Pacific’s HNW population reached 3 million in 2009, matching that of Europe for the first time. Asia-Pacific wealth rose 30.9 per cent to $9.7 trillion, surpassing the $9.5 trillion in wealth held by Europe’s HNW individuals.

“In practice, however, the challenge is that the number of Asian millionaires and volume of assets under management is growing faster than the reservoir of experienced banking talent available in the region; so the pressure to adopt a 'churn mentality' within a bank can be compounded when it becomes the product of expediency,” he said.

“Hiring a quantity of bankers to handle the quantity of business is not an option because there simply isn’t the available experience to manage new relationships in the best traditions of private banking. The solution lies in that historical perspective; in a return to selective 'quality relationships' – coupled with an incentive system for a bank and its bankers that is transparent to clients whose own success has proven they recognise a fair business proposition when they see it,” he said.

“The alternative – based on short-termism rather than the more arduous task of responding to the individual long-term needs of clients – would only undermine the integrity that should be implicit in private banking,” Brunner added.