SINGAPORE, Sept 21 (Reuters) Dutch lender ABN AMRO said on Friday that the planned merger of its private banking arm with Belgium's Fortis would significantly boost assets and make the merged unit the sixth-biggest private bank in Asia.
Industry estimates put ABN at the bottom of the top 10 private banks in Asia, where UBS , Citigroup , HSBC , Credit Suisse and Merrill Lynch rank in the top five.
Fortis looks set to purchase the global asset management and private banking units of ABN AMRO as part of a Royal Bank of Scotland-led consortium that has made the highest bid to buy ABN AMRO Bank, at 70 billion euros ($98.56 billion).
Barend Janssens, head of ABN AMRO's private banking arm for Asia, told Reuters that if the acquisition goes ahead the combined ABN-Fortis unit would have $30 billion in private banking assets for Asian and Middle Eastern clients -- 50 percent more than the around $20 billion that ABN private bank currently manages for its clients here.
''It would be a combination of close to $30 billion in assets in Asia, which would give us a sixth or seventh place in the league table,'' he said.
ABN AMRO's Asian private banking unit, which also covers the Middle East, saw its assets grow at 27 to 28 percent annually in the past three years, he said, higher than the average industry growth of 13-18 percent.
Janssens said he expects that the Asian private banking industry could sustain 13-18 percent growth next year because the booming domestic economies of China and India will create more wealth and reduce reliance on exports to the United States.
GROUND FLOOR REQUIREMENT Janssens said the bank is keen to build its China private banking business, which will start operations at the end of the year with a branch in Shanghai.
He said the China business will get a boost from ABN's existing operation in the ''mass-affluent'' segment in the mainland.
''We have the advantage of having the preferred bank there which caters to the wealth class below the private bank -- $100,000 to $1 million. That team has already worked for three years focusing on foreign currency products,'' he said.
He said that the bank's ''mass affluent'' business -- which has 12 offices in China -- is expected to be profitable this year.
But he said private banks will face several challenges in China because of the shallow private-banking talent pool and the need to develop more financial products in the local currency.
''While the market is going to be very big, the product development is very young on the reminibi front and the pool of bankers is small,'' he said.
He said ABN AMRO plans to train China-focused bankers by using teams of specialists based in Hong Kong or Singapore.
Janssens said the private banking market development had other obstacles, including the requirement for all banks to have branches at the ground floor level, which is costly.
Traditionally, private banks have their offices at the higher floors of office towers.
''Under current regulation you have to have a branch on the ground floor. It is a definite advantage for us because our preferred branch operation already has a ground-floor presence in some of the existing locations,'' he said.
REUTERS KR DS1623