Mumbai, June 25 2009: Following a year-long period of exceptional volatility in 2008, the combined wealth of the world’s high net worth individuals (HNWIs¹) fell 19.5% to US$32.8 trillion, according to the 13th annual World Wealth Report released today by Merrill Lynch Global Wealth Management and Capgemini. The number of HNWIs in the world was down 14.9 percent to 8.6 million, while the number of ultra high net worth individuals (Ultra-HNWIs²) fell 24.6 percent. The unprecedented declines wiped out two years of robust growth in 2006 and 2007, reducing the HNWI population and its wealth to below levels at the close of 2005.

In Asia Pacific, the HNWI population fell 14.2 percent to 2.4 million. Their combined wealth stood at US$7.4 trillion, a decline of 22.3% from a year earlier.

The world’s ultra-HNWIs suffered more extensive losses in financial wealth than the HNWI population as a whole. Consistent with the drop in the Ultra-HNWI population, the group's wealth decreased 23.9 percent.

“This year's World Wealth Report shows a distinct shift from our reports in recent years,” said Bertrand Lavayssičre, Managing Director Global Financial Services, Capgemini. “After a year of significant volatility, we’re seeing a shift in HNWI activity and priorities. There are currently opportunities for wealth management firms and advisors to understand and effectively address increased client concerns by helping to navigate through the uncertain economic times and build relationships that will continue well into the future.”

Global HNWI Population is Still Concentrated, But Shifting

Specific regions continue to host large percentages of the total global HNWI population, namely North America, Asia, and Europe. The top 3 countries for HNWI population - U.S., Japan, and Germany - together accounted for 54 percent of the world's HNWI population in 2008, up slightly from 53.3 percent in 2007.

“Despite the decline last year, Asia Pacific including India remains an important market for wealth management providers worldwide,” said Pradeep Dokania, Head of Global Wealth Management at DSP Merrill Lynch. “Wealth accumulation and creation in the region are poised to regain traction once the global economy recovers.”

India’s HNWI population was down 31.6 per cent to 84,000. In China, the HNWI population fell 11.8% to 364,000 but surpassed that of the U.K. to become the fourth largest in the world. Hong Kong's HNWI population shrank the most in percentage terms, down 61.3 percent to 37,000.

HNWIs Sought Refuge in Cash, Fixed Income, and Domestic Investments

Last year, HNWIs reduced their exposure to equities across the globe, and increased the proportion of their assets in safer and simpler investments, with more allocations to fixed-income securities, cash and liquid assets. Additionally, HNWIs allocated slightly more of their financial assets to real-estate holdings, which rose to 18 percent of the total global HNWI portfolio – an increase of four percentage points from 2007.

The proportion of cash-based holdings significantly increased to 21 percent of overall portfolios, up seven percentage points from 2006. Japan, where the savings rate has been traditionally high, had the largest number of HNWIs moving to cash-based holdings, at 30 percent. North American HNWIs, in contrast, held the lowest amount of cash or deposits as a percentage of their total portfolios at 14 percent, up three percentage points from 2007.

“Last year was about preservation and flight to safety,” said Pradeep Dokania, head of Global Wealth Management at DSP Merrill Lynch. “With no safe havens HNWIs ended up with significant amounts of cash in their portfolios. As markets recover, they will have the flexibility to readjust their strategies and reinvest in new, developing opportunities along the way.”

HNWI Wealth is Forecast to Resume Growth as Global Economy Recovers

Looking ahead, overall HNWI financial wealth is expected to grow to $48.5 trillion by 2013, advancing by an annual rate of 8.1 percent. North America and Asia Pacific are predicted to lead the growth, spurred by higher U.S. consumer spending and increased autonomy of the Chinese economy, which is already experiencing an increase in consumer demand.

Asia Pacific is set to overtake North America as the largest region for HNWI wealth by 2013. “As the global economy shows signs of recovery and asset prices pick up, we expect HNWI wealth to resume an upward trend with the Asia Pacific region leading the growth,” said Salil Parekh, CEO, Financial Services, India and Asia Pacific, Capgemini.

About Merrill Lynch Global Wealth Management

Merrill Lynch Global Wealth Management (GWM) is a leading provider of comprehensive wealth management and investment services for individuals and businesses globally. With approximately 16,000 financial advisors and more than $1.1 trillion in client assets, it is among the largest businesses of its kind in the world. More than two-thirds of GWM assets are with clients who have a net worth of $1 million or more. Within GWM, the Private Banking & Investment Group provides tailored solutions to ultra high net worth clients, offering both the intimacy of a boutique and the resources of a premier global financial services company. These clients are served by more than 160 Private Wealth Advisor teams, along with experts in areas such as investment management, concentrated stock management and intergenerational wealth transfer strategies. Merrill Lynch Global Wealth Management is part of Bank of America Corporation.

About DSP Merrill Lynch

DSP Merrill Lynch Limited is one of the leading wealth management, capital markets and advisory companies in India. As an investment bank, it is a leading trader and underwriter of securities across a broad range of asset classes and serves as a strategic advisor to corporations, governments, institutions and individuals.

About Capgemini

Capgemini, one of the world’s foremost providers of consulting, technology and outsourcing services, enables its clients to transform and perform through technologies. Capgemini provides its clients with insights and capabilities that boost their freedom to achieve superior results through a unique way of working - the Collaborative Business Experience - and through a global delivery model called Rightshore®, which aims to offer the right resources in the right location at competitive cost. Present in more than 30 countries, Capgemini reported 2008 global revenues of EUR 8.7 billion and employs over 90,000 people worldwide. More information is available at www.capgemini.com.

Capgemini’s Financial Services Global Business Unit

(FS GBU) brings deep industry experience, enhanced service offerings and next generation global delivery to serve the financial services industry. With a network of 12,000 professionals serving over 900 clients worldwide, the FS GBU collaborates with leading companies in banking, insurance, and capital markets to create tangible value. For more information please visit www.capgemini.com/financialservices.

Note to Editors/Reporters: To download the 2009 World Wealth Report, please visit www.capgemini.com/worldwealthreport.

1 Individuals with net assets of at least $1 million, excluding their primary residence and consumables.
2 Individuals with net assets of at least $30 million, excluding their primary residence and consumables.