As part of an aggressive campaign to increase its presence among the wealthy, Keycorp plans to quadruple the staff of its private banking and investment group over the next five years.
This year, the Cleveland-based banking company intends to hire 50 to 70 people versed in servicing the needs of affluent customers, said Daniel E. Klimas, Keycorp's executive vice president for personal financial services.
Hiring will be done first in Ohio and Washington State, followed by other states over the next five years.
The new hires will bring the staff of "relationship managers" in the private banking and investment group up to about 300 people by the end of this year. These employees specialize in trust services, money management, or private banking.
After that, the company plans to hire at a rate of between 150 to 250 a year, bringing the staff of specialists up to 1,000 people by the end of the decade.
Keycorp's planned expansion represents "a huge number of people," said Richard Scheide, a banking consultant with David Ross Palmer & Associates. "You're talking about bringing in a bucketful of new assets."
Mr. Klimas said he expects this business to grow 25% a year. "This is an underserved group of customers," he said.
Keycorp, with $67.7 billion in assets, was one of the first banking companies to serve the rapidly growing market of affluent customers with a private banking operation that incorporates trust and brokerage services.
In most banks, private banking, trust, and money management staffers work separately. At Keycorp, relationship managers work in teams consisting of trust officers, money managers, and private bankers who can help clients obtain loans, open checking accounts, establish trusts, or manage investment portfolios. These specialists are equipped with laptop computers and meet with clients at their homes and offices.
The private banking and investing group markets to customers with annual incomes of at least $100,000 and with at least $25,000 to invest.
It is one of three groups at Keycorp geared to serving affluent customers' needs. A separate private banking group markets to the "emerging affluent" - those with annual incomes of between $75,000 and $100,000. A third group, called the wealth management group, is dedicated to the needs of customers with more than $5 million to invest.
Mr. Scheide and other observers said that Keycorp's expansion plans for its private banking and investment group made sense in view of the rapid growth in the affluent population. The affluent market is growing at five times the rate of the American population, according to Payment Systems Inc., a research firm in Tampa, Fla.
Most banks have added staff in private banking areas incrementally, and that's been a mistake, Mr. Scheide said.
"You have a market that's growing as much as 25% per year," said Mr. Scheide. "If all you're adding is 7% in expenses, you're getting blasted in terms of market share every year."
