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[Statesman]

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Private banking

Rich pickings

Aug 17th 2006 | NEW YORK AND PARIS
From The Economist print edition

The rich are getting richer. So are the bankers serving them

ON THE 11th and 12th floors of JPMorgan Chase's private bank, overlooking Manhattan's Park Avenue, David Rockefeller keeps part of his private collection of modern art. Andy Warhol's Marilyn Monroe paintings hang on the walls; the gun fired by Aaron Burr that killed Alexander Hamilton sits behind a glass case next to objets d'art from Africa. Here, the private bank has its meeting rooms, into which only the most treasured of its clients are invited. Those that are receive white-gloved treatment from bankers who might otherwise be considered elite themselves. The private bankers aim to please: be that offering tricky investment advice to clients, or “summer reading” tips—this year's includes Elizabeth Kolbert on climate change. The attention pays off. From San Francisco to Shanghai, Switzerland to Singapore, the merely rich are becoming super-rich. Private banking is in bloom.

That was one reason UBS, a Swiss bank, announced a rise of almost 50% in second-quarter earnings on August 15th. The world's largest private bank by profits took SFr31.2 billion ($25.2 billion) in net new money from rich clients in the quarter, a 12% annualised growth rate. Credit Suisse, another Swiss bank, has also reported record inflows of private-banking money, and is expanding in the Middle East and Singapore (see article). Other big international banks, including JPMorgan Chase and HSBC, are investing heavily in wealth management. Goldman Sachs, which attracts most attention for its success in the grubbier world of trading, has muscled in, growing fast in Europe and Asia. In Europe it is planning more than to double its numbers by hiring several hundred private bankers over the next five years—wooing very rich clients with ??10m ($13m) or more to invest.