Bank of Boston Corp. is stepping up its private-banking business by lowering the minimum required to open an account to $300,000 from $500,000.
Kenton J. Ide, director of investments at Bank of Boston's private banking unit, said the bank hoped to attract younger people who are in the process of building up wealth. The move is directed at the private-banking market in southern New England, Florida, California, and the Midwest.
"We'd like to get into the door before anyone else does," Mr. Ide said. "If you don't get the customer early, you won't have a chance later on."
Mr. Ide added that fees, ranging from 1.25% of assets under management for smaller accounts to 0.5% for larger ones, would remain unchanged. Any increase in operating expenses for managing smaller accounts would be offset by channeling a portion of the assets into Bank of Boston's family of mutual funds.
Bank of Boston has $13 billion of assets under management in the United States. Other major players in New England include State Street Boston Corp., which manages $6 billion, and Mellon Bank Corp., which has $22 billion of assets under management and $13 billion of assets under custody and administration in its subsidiary, Boston Co.
Boston Co. sets a $1 million minimum for private-banking clients, and has no plans to reduce it in spite of increasing competition, according to spokesman Jonathan Hubbard.
State Street usually looks for investors with at least $500,000 of investable assets, said spokeswoman Sarah Lazarus.
Fleet Financial Group Inc. has $14 billion of private assets under management in New York and New England. It sets a $500,000 minimum, but offers institutional investment services for accounts of between $100,000 and $500,000.
Michael Noble, senior managing director at Fleet Investment Services, said his bank hoped to counter the growing competition in private banking by extending its relationships with private banking customers to areas like estate and tax planning.
Bank of Boston's assets under management have been growing at 10% annually and this rate is expected to continue.
"Bank of Boston has historically done quite well in corporate banking," said Michael Diana, an analyst with Bear Stearns & Co. "They always had a blue-blood trust department but have only started to focus on the consumer in the last few years."
