The California private banking market is heating up as big money management banks shift their focus away from large institutions to wealthy individuals.
BankAmerica Corp. said it plans to double its private banking sales staff in the state to 50 people by the end of the year. Meanwhile, New York's Bessemer Trust Co., which opened a Los Angeles outpost last year, is planning to open a San Francisco office early next year. And Beverly Hills' City National Bank said it too is on the hunt to build its staff catering to the rich.
"The (affluent) market has been genuinely underserved," said Vernon C. Kozlen, executive vice president of City National. Most banks in California historically sought to serve institutional trust accounts, Mr. Kozlen explained. That market is now saturated and a "major shift" to promote high-end private banking is under way.
BankAmerica's private banking group, with 10 offices statewide, already has added eight salespeople, said senior vice president Gloria S. Nelund. Ms. Nelund, based in Los Angeles, said the boost already is making a difference and the initial goal of having a 50-man team may prove unnecessary.
The hiring spree is "driven by our analysis of the market and our view that we have the best array of services," she said. "We said, 'look, let's get our story out there and make sure people know us.'"
In addition to the native BankAmerica and Wells Fargo & Co., other banks serving California's wealthy include Credit Suisse, Union Bank of Switzerland, Chase Manhattan Corp., U.S. Trust Company of California, and Northern Trust Bank of California. Fidelity Management Trust Co. recently set up shop in Los Angeles, opening an office headed by a former BofA trust executive, R. Daniel Banis.
City National, which already has 24 branches in Los Angeles, San Diego, and Orange counties, said it plans to tack on more in Ventura and Riverside counties pending the close of acquisitions there. Mr. Kozlen did not disclose the number of people working in sales at City National, but said he was adding to the private banking, trust and investment management staffs in most of his branches.
Even smaller private banking players in California are beefing up, hoping to fill niches not served by behemoths like Wells Fargo and BankAmerica.
For instance, Arthur C. Rutzen - a former Wells banker - set up a wealth management group this summer at Pacific Bank in San Francisco, where he serves as executive vice president.
Other smaller institutions in the state such as Sumitomo Bank of California in the north and PFF Bancorp in the south have been building sales efforts in hopes of picking up private bank clients displaced by big bank mergers.
At BankAmerica, the decision to hire more private banking salespeople came from its chief executive officer, David A. Coulter, Ms. Nelund said. According to Ms. Nelund, Mr. Coulter was prodded to action by David Ross Palmer, a private banking consultant who has known Mr. Coulter for 15 years.
Mr. Palmer, based in New York, said he told Mr. Coulter that all California money managers need stronger sales efforts because "Merrill Lynch has more people in California than all the banks put together."