Citibank is pushing hard to create an image as a global money manager.
Three months ago it consolidated virtually all of its asset management functions into one division, called Citibank Global Asset Management. The new unit controls about $60 billion of private banking and trust assets, including the bank's proprietary Landmark mutual funds.
The unit is staffed by investment officers from Citibank's domestic and international private banking operations, as well as from parts of its corporate and investment banking divisions.
Credit functions, trust administration, and estate planning, however, remain in the private banking division.
Questions on Substance
Some competitors insist the changes at the nation's largest bank are only cosmetic, but Citibank officials say the bank will emerge as a powerhouse in international money management.
Indeed, the new expense-obsessed Citicorp has hired an outside manager to run the new money management unit and expects to add staff.
The new chief executive is W. Neville Bowen, who held a similar post at Hill Samuel Investment Management Group in London. He oversees about 700 people worldwide.
Like Citicorp, many private banking divisions are focusing less on lending and more on managing clients' assets. They want to avoid credit problems, reduce capital-intensive balance-sheet assets, and book continuous asset management fees.
They also are eager to compete with foreign-owned banks that are wooing U.S. investors with their global management skills.
"The idea is to have a first-class asset management operation," said James Hocking, the group's senior investment manager in North America - "to globalize, even more, what's happening in investment management around the world for Citibank."
Citibank hopes the new unit will improve communication among various parts of the bank, some people said. But in the short run, it is part of a far-reaching private banking reorganization that is rather confusing.
In early January, Citibank split its domestic private banking area into relationship management and product management. Jack Reilly handled the clients and William Friesell the products. Both reported to David Van Pelt, head of domestic private banking.
Within two months, Mr. Reilly replaced Mr. Van Pelt as head of the domestic division. Mr. Van Pelt is now working on a capital-raising program for the holding company, according to a bank spokeswoman.
Mr. Friesell was named chief of staff to David Gibson, who is in charge of the entire global private banking operation.
Says Mr. Hocking, who was formerly chief investment officer of domestic private banking: "Reorganization is sort of a way of life here."
Want to get in touch with some rich people?
Add the Institute for Private Investors to your Rolodex. It's a new group organized for wealthy families - those with minimum assets of about $100 million - and their investment advisers.
More than 130 of them attended an inaugural conference last month at New York's St. Regis Hotel.
"There was probably $4 to $5 billion in assets represented in that room," said one investment manager who attended.
The group was formed by Charlotte B. Beyer, a New Jersey-based consultant and former trust banker. She said its purpose is to conduct research and hold forums for the "rapidly growing" industry that advises wealthy families.
Among its early research findings: Over 80% of the group's families said they had fired one investment manager within the last five years and over half intend to hire a money manager within a year.
The institute's members include Bankers Trust Co., Bessemer Trust Co., Brown Brothers Harriman & Co., and Swiss Bank Corp.
Mercantile Bancorp., St. Louis, has spun off its private banking, personal trust, brokerage, and estate planning divisions into a separate trust company - Mercantile Trust.
"Each group wasn't telling the client the other services that were available," said Walter Gray, chairman of the new company.
Under the new structure, he added, "clients can have all their services in one general area."
Mercantile, an $8.3 billion-asset banking company, manages $10.6 billion of assets - about $4.5 billion at Mercantile Trust for individuals and $6.1 billion for institutions. Mercantile Trust has a loan portfolio of $254 million.
