U.S. Trust head debunks sale, other myths

NEW YORK Mon Oct 4, 2010 6:22pm EDT

Keith Banks, President of U.S. Trust, speaks during the Reuters Global Private Banking Summit in New York, October 4, 2010. REUTERS/Lucas Jackson

Keith Banks, President of U.S. Trust, speaks during the Reuters Global Private Banking Summit in New York, October 4, 2010.

Credit: Reuters/Lucas Jackson

NEW YORK (Reuters) - The head of U.S. Trust said on Monday there are a lot of misconceptions about the private banking unit of Bank of America Corp (BAC.N), and that the unit is not for sale.

Keith Banks, president of U.S. Trust, said that the unit does not compete with Merrill Lynch's high net worth business, another business under the Bank of America brand. In fact, the unit is growing, he said.

"It's not a zero sum game," Banks said of the relationship between U.S. Trust and Merrill's high net worth division, speaking at the Reuters Global Private Banking Summit.

"We very rarely, if ever, came across Merrill Lynch as a competitor" before Bank of America purchased Merrill, he said.

(For a Reuters Insider interview with Keith Banks, see: link.reuters.com/nak56p )

Merrill Lynch's brokerage business is focused on less-rich investors but also has some super-rich clients, leaving some to question whether the two businesses are competing for the same clients, he said.

Analysts and investors speculated last year that Bank of America, which was selling assets to boost capital, might also sell U.S. Trust. Indeed, one of the first comments made by Bank of America's Brian Moynihan in December 2009, in his new role as chief executive officer, was to insist that the unit was not for sale.

But U.S. Trust has a long history of changing hands. It was sold to discount brokerage Charles Schwab Corp (SCHW.N), then sold again in 2007 to Bank of America for $3.3 billion.

Amid the sales, the private bank has seen dozens of bankers and other executives head for rivals, including a highly aggressive Citigroup Inc. (C.N)

Banks said some of U.S. Trust's recent attrition reflected the private bank imposing higher internal standards.

Client-facing professionals were at 2,163 as of June 30, down from 2,200 in the year-earlier period. Assets under management fell to $177.6 billion from $180.9 billion during the same period.

GROWING THE TRUST

U.S. Trust has hired more than 40 people from all of its major competitors in recent months, Banks said, emphasizing the health of the unit.

He described hiring among private banks as an "aggressive war for talent" and called it "as aggressive a period as I've ever seen."

Banking divisions that focus on the rich are particularly attractive right now because they bring in more money for the bank than divisions that target lower-value clients.

Banks said U.S. Trust is actively courting bankers, and he expects each of his local market executives to know the top five bankers the company should hire at any given time.

"I've made clear to our local folks that they should know who we need to hire," he said.

But he cautioned the business will not look to hire a broad swath of advisers nationwide.

"Not every market is in the same mode at the same time," he said. He described his hiring strategy as the "peanut butter approach" -- spreading new hires evenly throughout the company, rather than focusing on one or two key markets.

The West Coast is next up in terms of hires, Banks said.

(Reporting by Clare Baldwin, additional reporting by Joe Rauch and Joseph Giannone, editing by Matthew Lewis)

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