Shortly after closing its merger with Chemical Banking Corp., Chase Manhattan Bank reduced the minimum account size in its private bank to $1 million, from $5 million.
To help enforce the minimum, Chase Tuesday sold $1 billion worth of offshore private banking accounts to Swiss Bank Corp.
The bank will strictly adhere to the $1 million minimum on its domestic accounts, too, according to a Chase private bank spokeswoman. But the private bank cupboard in the United States will not be cleaned out the same way as in the Swiss Bank deal.
"There certainly are other areas of the corporation that can serve clients of all income levels," the spokeswoman said.
Outsiders say, however, that the bank will not simply send off affluent U.S. clients to another part of the bank, such as its brokerage unit.
"Clients wouldn't like that, and they would leave," said Douglas Trott, president of Taddingstone Consulting Group. "They'll set up a new group to deal with those clients." Mr. Trott has advised Chase's private bank. He added that this new group would likely have a tony name.
The foreign accounts sold to Swiss Bank were managed in New York and Miami by 15 Chase private bankers, who will move to Swiss Bank as part of the deal. Terms of the acquisition were not disclosed, but observers said it is likely to benefit Chase.
The offshore accounts were "a money-losing proposition ... and somebody else wanted them. Great," Mr. Trott said.
The sale of the offshore accounts does not mean the new Chase is pulling back from catering to wealthy clients on a global basis. It manages $110 billion in 120 countries, including the United States. The private bank, which is headed by executive vice president James W. Zeigon, does not disclose the amount of assets managed for foreign clients.
Last year, assets managed by Swiss Bank for clients outside Switzerland rose to 13% of its total private banking business, from 11%. The Chase deal gives Swiss Bank a chance to increase that share further. It maintains private banking offices in 28 countries outside Switzerland.
In its efforts to expand, Swiss Bank is on a buying spree. When it announced the Chase deal, it also said it was negotiating to buy the private banking business - with $5 billion under management - of Standard Chartered Bank in Hong Kong.
