Credit Suisse buys HSBC's private bank

HSBC, Europe's biggest bank, is retreating from Japan's private banking market, selling a business that serves the wealthy to Credit Suisse, which is raising its profile in the world's second-largest market for millionaires.

The sale is part of a strategy outlined by HSBC in May. Chief executive Stuart Gulliver wants to cut annual costs by $3.5bn (£2.2bn) and sharpen the bank's focus on Asia by quitting countries or businesses where it lacks scale.

HSBC said the gross assets of the business being sold were worth $2.7bn at end-October, but it gave no sale price.

"(HSBC) is focusing on raising its return on equity and cutting costs, so it will focus on the high growth business," said Daniel So, Sun Hung Kai Financial strategist in Hong Kong.

"They probably don't see much growth potential in the Japanese market, so will do better to focus resources in other countries in the Asia-Pacific region."

Asia is a battleground for global and local private banks competing for market share in a region that is fast outpacing the United States and Europe in economic growth.

Powered by China and India, Asia-Pacific's millionaire ranks rose 10 per cent to 3.3m last year, just behind the 3.4 million in North America and ahead of Europe's 3.1m, according to a Merrill Lynch/Capgemini Asia-Pacific wealth report.

Asia's combined wealth rose 12 per cent to $10.8 trillion last year to overtake Europe and close in on North America, where wealth rose nine per cent to $11.6 trillion. More than half the world's millionaires are still to be found in the United States, Japan and Germany.

Asia's private banking industry has seen consolidation recently as the market turmoil dampens growth, and rising regulatory and staffing costs dent profitability.

Swiss private bank Julius Baer said in October it was buying the Asian private wealth portfolio of Australia's top investment bank Macquarie Group.