Geoff von Kuhn, who until last week led Citigroup Inc.'s U.S. private bank, will not face an easy situation at the helm of Amsouth Bancorp's wealth management business.
There are tough competitors in the Southeast vying to manage the assets of the wealthy. Among them is First Union Corp. of Charlotte, N.C., which has emerged as a big player in the asset-gathering in recent years through acquisitions in brokerage and asset management.
Northern Trust Corp., a Chicago bank with a notable private banking presence, has also extended its reach into Florida to manage assets for wealthy residents.
Amsouth's chairman, chief executive, and president C. Dowd Ritter has set a goal of doubling the Birmingham, Ala., regional's pretax income from wealth management, to $100 million, by 2003. Mr. Ritter acknowledges that Amsouth will be up against intense competition. "This is a business that probably every bank in the country is trying to grow," he said in an interview.
Mr. von Kuhn, interviewed separately, gave just a few hints of his plans, saying he plans to spend six to eight weeks studying the business before submitting a plan to Mr. Ritter and the company's board. One of his first tasks will be to hire an executive to run Amsouth's trust business, he said, and "a few things need some fine-tuning."
Mr. von Kuhn said his new job gives him the best of both worlds. "Amsouth offered me a job that was just as challenging as what I had in New York, but offered me a better balance between family and work."
Mr. von Kuhn, 49, wasn't at Citigroup very long, having joined the company back in May 2000. But prior to that, he was at another big banking company, Bank One Corp. in Chicago, where he put in six years and was a senior managing director of Banc One Capital Markets.
To reach Amsouth's goals, Mr. von Kuhn will need to whip up the troops. The group's pretax income grew 11%, to $62.4 million in 2000, or about 14% of overall pre-tax income. And it grew just 7.5%, to $56.2 million in 1999, or 10% of overall pretax income. To reach $100 million, it must grow at least 20% a year for the next three years.
He said he believes 20% to 25% growth is possible. "A majority of the pieces are there, and we have excellent people. The implementation is not that difficult, given the footprint that we're in and given the reputation that Amsouth has," Mr. von Kuhn said. Rather than building from scratch, he said the bank may seek joint venture partners for "some of the investment pieces where we have holes."
Amsouth's wealth management group includes a broker-dealer business, investment and trust services, private banking, and the bank's proprietary mutual fund family, Amsouth Funds. It targets wealthy customers with at least $250,000 and income, or $500,000 in investable assets. The unit also sells corporate retirement plans and asset management services. Amsouth has 600 branches in Tennessee, Alabama, Florida, Mississippi, Louisiana, and Georgia.
Analysts generally applauded Amsouth's announcement, though they warned of tough competition for the tiny sliver of wealthy customers in Amsouth's six-state southeastern territory.
"He's got quite a pedigree. That's good," said Marni Pont O'Doherty of Keefe, Bruyette & Woods Inc. "We'll have to see. I hope it works out because they do want to make a lot out of this business."
Mr. Ritter echoed the sentiment about his new hire. "We were very fortunate that we were able to attract someone with Geoff's credentials and experience," he said.
But the race to manage the high-net-worth assets is tough for everyone, said John Moore, a banking analyst at Wachovia Securities Inc. in Charlotte, N.C. Amsouth and other banks face the same challenges in expanding money management for the rich, who account for a small portion of their customers.
"If 100% of the banks go after 5% of the customers, and J.P. Morgan has 1 out of 7 of these 5%, it sounds to me like it's going to be an incredibly tough business to grow."
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