Crisis makes exclusive banks a bit less so

By Laura MacInnis

GENEVA (Reuters) - The world's most exclusive banks are seeking out a new roster of clients because of the financial crisis that has written off wealth in many traditional markets, industry executives said.

Private bankers said they are on the hunt for customers they once overlooked as a way to beef up the assets they manage in the period ahead, when sinking markets and slowing economies are expected to dampen wealth creation worldwide.

"There are people that qualify for private banking that are being looked after by the retail banks," Peter Flavel, head of private banking at Standard Chartered, told the Reuters Wealth Management Summit.

"There is a lack of supply of private banking services," he said, stressing that while it may be harder to find potential clients in a downturn, many investors may well welcome the special attention provided by a private bank.

"While growth will be more subdued, there is still a task for the wealth management industry to play," Flavel said.

Union Bancaire Privee Managing Director Christophe Bernard, in charge of the Swiss bank's asset management division, said wealthy individuals in Latin America and Asia would be the new drivers of growth for banks catering to the very rich.

"There have been some countries which have got wealthier ... There are large pools of capital," he told the summit.

Private banking clients have been typically entrepreneurs and those who inherited large fortunes in western Europe, though UBP and others have also developed strong links with the Middle East where high oil prices have lined many pockets.

MERGERS MAY BE NEEDED

Bernard, who said Middle Eastern clients remained critical private banking customers in the downturn, also said banks that previously had scores of affluent clients to woo may now need to merge to strengthen balance sheets in tough economic times.

"There will be consolidation in private banks," he said.

ING Group's deputy private banking head, Bernard Coucke, said that big write-offs of the world's wealth meant wealth managers would have to work harder to retain their clients.

"I am convinced that banks and private banks do not have a monopoly on wealth," he said, noting insurers and other asset managers also had offers to make. "It is not only private banks who are targeting wealth. We are with a lot of competitors."

The Dutch bank is planning to expand its reach into Asia, including South Korea, Japan and China, as well as in eastern Europe where he said Ukrainian private banking should get off the ground in the coming years.

Africa was "the continent to watch" in the years ahead but would not bring clients soon, Coucke said. "I am a big believer in Africa but I don't think it will be for my generation."  Continued...