April 20, 2011 / 1:39 PM / 8 years ago

Tycoons add allure to private banking

* New super rich need private and investment banking

* Private banking becoming more elite

* Growing trend of investment bankers moving to wealth

By Chris Vellacott

LONDON, April 20 (Reuters) - Banks are sending some of their best talent to work in private banking as clients get richer and demand more, siphoning off recruits from a traditionally higher paying and racy career in capital markets.

Many banks reporting first-quarter earnings in coming weeks are prioritising expansion in wealth management because its stable deposit base offsets more volatile business lines like trading or investment banking.

But banks are also eyeing an emerging client group, namely the international oligarchy of families that have amassed vast wealth through control of global companies.

While these clients will want personal services for the super rich like premium credit cards or mortgages on superyachts, as owners of huge business empires they are also heavy users of investment banking.

Where once private banking was seen as a genteel arm of the industry, dealing in inherited wealth, it now needs higher calibre staff with investment banking expertise, bankers say.

“One of the results of the boom in emerging markets and commodities has been a huge rise in the number of owner-occupied firms that have become global businesses,” Des Byrne, managing director at Barclays Wealth’s (BARC.L) UK and Ireland arm, said.

“That’s given rise to this “ultra” need that many of the banks are targeting ... — the application of investment banking style products and services to individuals, to human beings as opposed to the board or management teams of companies,” he said.

Prominent examples of people associated with dominant global companies include Mexican telecoms billionaire Carlos Slim, steel tycoon Lakshmi Mittal or Russian magnates like Oleg Deripaska.

Reflecting this blend of private and corporate banking, British bank Coutts has set up a division aimed at turning corporate shipping clients of its parent Royal Bank of Scotland (RBS.L), many of which are owned by Greek families, into private bank customers. [ID:nLDE6B50NW]

Citi’s (C.N) private banking arm reshaped itself after the financial crisis to sit within the group’s institutional business, focusing on clients rich enough to own big companies needing regular access to global capital markets.

Recruiters and bankers say the entry requirements for private banking are far higher than they were a decade ago.

And a once unimaginable phenomenon — investment bankers opting to become private bankers — is gathering pace.

The top ranks of many international private banks are already well populated by people who cut their teeth in investment banking.

Byrne joined Barclays’ private banking arm in 2008 from Barclays Capital. His boss Thomas Kalaris, chief executive of Barclays Wealth also came from an investment banking background.

Other notable examples include Rory Tapner, head of RBS’s wealth management arm and a one time joint global head of investment banking at UBS UBSN.VX.

Stephen Russell, chief of staff at UBS’s wealth management arm in the UK, says the few private banking jobs on offer in his business are routinely inundated with applicants.

“In the context of this year, we’ve made eight hires and interviewed about 140 people ... The challenge for us is getting a fit with what we and our clients expect from people and what exists in the market,” he said.

Investment banking remains potentially more lucrative, paying up to 40 percent more in total compensation according to Sophie De Ferranti, head of private wealth management at ValensGoldberg, a headhunter based in London.

But private banking pay is less volatile, Byrne says, and attracts many former capital markets staff looking for an escape from the increasingly technical and narrowly focused word of investment banking.

“It’s not an easy option, It’s a different lifestyle,” he said.

(Editing by Sinead Cruise and Mark Potter)

For the Funds Hub blog: blogs.reuters.com/hedgehub For Global Investing: here

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