Chase's Private Bank Restricting Clientele to Higher Class of

At Chase Manhattan Corp.'s private banking group, it's not enough to be merely affluent.

The unit is going after the business of the wealthy, who are defined as clients whose investable assets are north of $5 million. The affluent - lesser millionaires - will be served by the banking company's retail division.

At a time when most private banking concerns are reducing their minimums in order to capture the emerging affluent, Chase's private bank has raised its threshold from $1 million to $3 million, though it's really looking for larger accounts.

James W. Zeigon, Chase's head of global private banking, argues that the needs of someone worth more than $5 million are distinctly different from those of someone who is merely affluent.

For one, Mr. Zeigon said, the truly wealthy are usually interested in and can afford the expense of using sophisticated investment products like hedge funds and merchant banking.

Customers with less are better served by more traditional investment products like mutual funds, he said.

Also, Chase would like to be a "trusted investment adviser" to all its clients - a goal best achieved when dealing with a smaller universe of clients, according to Mr. Zeigon.

"To service clients, you need time to think," Mr. Zeigon said. "The more down-market you go to, the less time you have."

Under Mr. Zeigon's leadership, the private bank has repositioned itself to serve individuals, entrepreneurs, and wealthy families with at least $5 million of investable assets. The average client in that category has $30 million invested at Chase.

The strategy works well, provided that Chase does not forget about the kind of clients who are on their way to wealth, said David Ross Palmer, a New York-based private banking consultant.

But Mr. Zeigon said that clients who do not meet the private banking minimums are handled by a special group, formed in the last year, which operates out of the retail bank.

The unit, dubbed the financial strategies group, deals with clients having $500,000 to $3 million of assets. It sells products offered by Chase Manhattan Investment Services group, the retail bank's brokerage arm.

Regarding his upper-end clientele, Mr. Zeigon said he ultimately would like to have a maximum of 15,000 global private banking clients, up from the current 5,000 to 6,000.

And apparently Chase has even thought up the problem of succession. On top of the annual global investment seminars the private bank sponsors for adults, Chase holds annual sessions in Geneva on wealth transfer and investment for the younger set.

The bank would like to manage about $90 billion of assets worldwide by the end of the century, up from the current $68.7 billion. Of this total, $9 billion is held in Chase's Vista family of mutual funds.

All this thinking, of course, is fueled by Chase's ambition to become a leading global bank, a goal that prompted the private bank to set its own sights abroad.

Mr. Zeigon himself is credited with having integrated Chase's domestic and global private bank and streamlining its operations. Although Chase relationship managers roam 20 countries, clients in 120 nations can be reached from three main business locations in New York, Geneva, and Hong Kong.

A great believer in the power of global communications, Mr. Zeigon has embraced technology as a means of quick access.

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER