GENEVA // For a private banker in search of a client, rich is just not rich enough any more. Clients with less than US$5 million (Dh18.3m) to invest are losing their appeal as the elite of the industry fight over those with much more than that.
The "super-rich" - those with tens of millions of dollars to spare - were hit hard during the credit crisis but are rebuilding their wealth faster than most, making it an attractive segment for private banks.
Data from the Capgemini-Merrill Lynch World Wealth Report showed the super-rich grew their wealth by 21.5 per cent last year, well above global wealth growth of 17 per cent. The industry calls them "ultra-high-net-worth" individuals (UHNWs) and is pursuing them at the expense of their less fortunate fellows - the plain HNWs - some of whom may now face the indignities of retail banking. "There is no question that there is bigger competition now for ultra-high-net-worth clients," Pablo Garnica, the head of private banking for Europe, the Middle East and Africa at JP Morgan, told the Reuters Global Private Banking Summit.
"This has always been our base. But now there is a bigger war for talent in that ultra high wealth segment," said Mr Garnica. The actual point where a HNW becomes a UHNW varies from bank to bank and is higher for an unsophisticated inheritor than for a rising businessman. UBS, already the world's biggest bank to the super-rich, has defined the UHNW segment as individuals with more than $50m. Adding to the trend away from special services to the merely rich, governments around the world have become more demanding on tax compliance for money held abroad. This means a lot of red tape for the handling of relatively small accounts.
"It is too cumbersome to manage small accounts," said Alberto Valenzuela, the deputy chief executive of Societe Generale Private Banking (Suisse), whose bank recently declined to buy private banking assets in Switzerland because they were mainly comprised of small accounts. "Anything over $5m is of interest."