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* Foreign private banks seen raising headcount by a fifth in2015
* New investment options including start-ups fuellingrevival
* Individual financial assets set to double to $5 trillionby 2019
By Sumeet Chatterjee
MUMBAI, Feb 17 (Reuters) - Foreign private banks are bulkingup in India once again after downsizing in the past few years,anticipating new opportunities to advise Indian millionaireseager to cash in on an Internet start-up boom and on signs of aneconomic revival.
Bankers and consultants surveyed by Reuters said foreignprivate banks will hire wealth managers this year and increasetheir headcount by a fifth, compared to a 10-15 percent fall ineach of the past two years.
Barclays, which runs one of India's top privatebanks, said its headcount could rise by 15-20 percent in 2015.
Wealthy Indians are looking to put money in new-agetechnology companies after they watched savvy foreign investorssuch as Singapore's Temasek Holdings and Japan'sSoftBank Corp scramble over the past few years to get apiece of Indian e-commerce companies, including Flipkart
The start-ups offer a new investment route for themillionaires, who are using wealth managers to guide them onthese investments.
So far, the rich in India channelled funds into traditionalproducts such as equities, bank deposits and government bonds.And an annual cap of $250,000 on overseas remittances by onshoreIndians effectively rules out significant investments overseas.
To tap into this demand, venture funds are being launched that seek to raise money from high networth individuals (HNIs)for investments in start-ups. At least two venture funds arecurrently raising a combined $160 million from Indian investorsincluding wealthy individuals, to invest in start-ups, peopleinvolved in the matter said.
"In the first round, it was mostly foreign investors whowere chasing the start-ups. Now the Indian HNIs are waking up tothis opportunity," said Atul Singh, India head for wealthmanagement at Bank of America Merrill Lynch.
India's e-commerce firms last year attracted more than $5billion in investment, the bulk of it from overseas investors,compared to less than $2 billion in 2013.
"The return from these investments could be double that ofthe public equity markets," said a wealth manager at an Europeanbank, declining to be named. "Of course, the risk is also higherand that's why the clients need advice."
Another reason for the enthusiasm among affluent Indianinvestors is the economy, which is expected to grow 7.4 percentin the year ending March and at a faster pace than China's inthe years ahead as a new government kickstarts economic reforms.
STIFF COMPETITION
For foreign private banks, whose Indian ambitions have sofar been held in check by intense competition from local playersand sluggish revenues, the developments are welcome.
They are drawn to the long-term potential of the market,where individual financial assets are expected to more thandouble from last year's level to $5 trillion by March 2019,according to local wealth manager Karvy.
While more than half a dozen foreign private banks operatein India and employ about 300 wealth managers, they are saddledwith higher operating costs and struggle with a limited branchnetwork compared with their local rivals.
As a result, the Indian units of some banks, includingCredit Suisse Group AG, slashed headcount in therecent past. Others, such as Morgan Stanley and UBS AG, exited altogether.
The business landscape is changing now, bankers said.
A regulatory move last year for private banks to separateclient advisory services from transactions carried out on theirbehalf will make wealth managers focus on advice and give theman edge over local rivals because of their global network,boosting fee income and stabilising revenues, bankers said.
"As a market, we are coming closer to the reality that ifyou want impartial advice you will have to pay a fee," saidSatya Bansal, head of India wealth management at Barclays, whichemploys 40 wealth managers and plans to add more. ($1 = 62.0643 Indian rupees) (Editing by Clara Ferreira Marques and MuralikumarAnantharaman)
