Ameriprise Financial Inc. says it hopes launching a bank will give its financial advisers the tools to increase wallet share, but an analyst was skeptical.
The Minneapolis financial planning company announced Monday that it had opened Ameriprise Bank. Joe Sweeney, Ameriprise’s president of financial planning, products and services, said establishing a bank was a top priority after the spinoff from American Express Co. last September.
“From a private-client point of view,” he said, “we have an existing relationship, and as long as we provide a competitive product and pricing, we can get more share from our existing customers. These banking products give us a platform to deepen our relationships with existing clients and attract more to our franchise.”
Analysts said Ameriprise would face an uphill task, however, since most of its customers already have banking relationships. “It isn’t impossible, but it is difficult to attract assets when you are the new kid on the block,” said Kevin Daniels, a Boston analyst.
Mr. Sweeney, who is also chairman of Ameriprise Bank’s board of directors, said the bank will unveil products over the next three to five years including loans, cash management, and personal trust. It will get started with the $1.1 billion of assets it gets in the next 30 to 90 days by assuming the retail banking and trust business currently done by American Express Bank.
The initial product lineup will include mortgages, home equity loans, and lines of credit. From there, he said, Ameriprise Bank will introduce “vanilla” banking products such as deposit accounts, money market funds, and certificates of deposit; traditional banking capabilities such as payments, checking accounts, ATM services, and online bill payment options; and personal trust services.
“We are not just creating a bank for a bank’s sake,” Mr. Sweeney said. “We are trying to deliver a range of products and services to help clients and advisers.”
The bank, chartered in February, is to be headquartered in New York and have operations in Minneapolis and Phoenix, he said, and there is no plan to open branches. Banking products will be sold through Ameriprise’s network of 10,000 financial advisers.
Burton Greenwald, an analyst at BJ Greenwald Associates in Philadelphia, said companies like ING have successfully employed an online banking platform to offer high-yield money market and savings accounts that can attract “substantial” deposits.
“This is a way to capture greater share of wallet by providing unique services that competitors don’t offer,” he said.
Nonbank companies, including retailers like Home Depot and Wal-Mart, are looking to introduce banking products. Last week, the broker A.G. Edwards Inc. announced plans to start a bank deposit program, and in the last year the broker E-Trade Financial Corp. and the tax preparer H&R Block Inc. added banking products.
Mr. Greenwald said Ameriprise could also use its banking platform as a cheap source of funding and to empower it to act as a trustee for IRAs and other retirement products.
Mr. Sweeney said the bank would target customers nationally.
