Banks vie for rich clients as wealth soars

By Douwe Miedema

GENEVA (Reuters) - The battle for the favors of the world's ultra-rich is heating up as more banks seek a piece of what they see as the fastest growing sector in the financial industry.

Citigroup (C.N: Quote, Profile, Research, Stock Buzz), Barclays (BARC.L: Quote, Profile, Research, Stock Buzz) and HSBC (HSBA.L: Quote, Profile, Research, Stock Buzz) all expect income from their wealth management units to rise as they invest heavily in attracting clients across the globe, encroaching on the domain of the private banks.

Market leader UBS (UBSN.VX: Quote, Profile, Research, Stock Buzz) from Switzerland -- the world's largest wealth manager by most measures -- holds only a 3.5 percent market share, which shows the scope for expansion either from organic growth or through acquisitions.

Senior executives from leading players across the globe are to discuss the market at the Reuters Wealth Management Summit on Tuesday and Wednesday, highlighting their corporate strategies.

Recent research by Bear Stearns showed that the global fee pool for catering to the needs of millionaires and billionaires could top $200 billion by 2010 -- more than three times the income available in investment banking.

One issue will be how wealth managers can access growth in Asia and the Middle East, where booming economies and stiff commodity and energy prices are creating new wealthy customers at double-digit growth rates each year.

Switzerland is the traditional home of private banking because of its banking secrecy laws, strong currency and stable political climate. But its leadership is being challenged by other financial centers such as Singapore, Hong-Kong and Dubai, which cater to clients in emerging economies.

Many traditional wealth managers still have most of their clients in Europe, where growth is tepid, and may find themselves in trouble should equity markets crash, because their income to a high degree is related to asset prices.  Continued...