It may sound like an oxymoron, but Modern Bank is planning to use an old-fashioned approach to develop a cadre of private banking clients in the congested New York-area market.
And analysts said that, with its roster of banking veterans, including two pulled from retirement, the New York private bank, which was launched this month, could succeed in developing assets.
Anthony Burke, Modern Bank's president, said it would like to develop business steadily in New York, then look to expand into markets such as San Francisco, Los Angeles, and Chicago.
Leslie E. Bains, the bank's vice chairman and head of private banking, said she is confident that Modern can grow by targeting a limited group of high-net-worth investors with $5 million to $150 million of assets. The bank hopes to attract 250 clients in the next three years, she said.
"Because our single focus is private banking and these customers, we can develop the right products and services for them very quickly," she said.
"We want to return to the old-fashioned retalionship approach to private banking," she added. "We want to be the trusted adviser and sit on the same side of the table as our customers. We are not pushing a 'product of the month' philosophy at them; we want to advise on their wealth."
Ms. Bains, 63, retired from HSBC North America in 2003 as a senior executive vice president, but she said she was drawn back by the opportunity with Modern Bank. In December, it bought Excel Bank, which had $202.5 million of assets, to be the foundation for the private bank.
Modern Bank was opened with a staff of 50, including 18 former employees of HSBC and five formerly from U.S. Trust.
"We have hired an extraordinary group of private bankers that each has substantial Rolodexes," she said. "We are confident we will be successful because private banking has become very functionalized. Banks have executives that handle credit and someone that handles investments and someone that does this and that. Clients have no point of contact. Clients don't want to talk to a salesman; they want a trusted adviser. We want to replicate an old-fashioned approach and give them that trusted adviser."
Ms. Bains said Modern Bank surveyed 50 people with $50 million of assets. Forty-nine of the 50 were disenchanted with their private banking relationship, she said, and said they were willing to move their money because they were "discouraged" by the level of service they were receiving.
Mr. Burke, 59, retired in December 2003 from New York Community Bank, where he was the president and chief operating officer. Modern Bank has four private bankers, he said, and he expects to add two to five by yearend. The bank's chairman is Bippy Siegal, who was the chief executive officer of the New York venture capital firm Raycliff Capital. Former pro football quarterback Joe Montana is another vice chairman at the bank.
"The dissatisfaction in private banking is not just limited to clients," Mr. Burke said, "but the private bankers themselves are dissatisfied. They are not doing the job they want to be doing, and there are a lot of people that want to join us."
Rus Prince, a high-net-worth analyst at the Prince & Associates consulting firm in Shelton, Conn., said Modern Bank will "easily" draw customers. It will succeed, he said, because it has deployed highly qualified people, an open architecture approach, and pinpoint customer focus.
"There is still an enormous opportunity to develop customers in the New York metropolitan area," he said, "because, despite everything everyone says, no one has really developed any real market share in this universe."
Modern Bank has not devised a new model, he said, adding, "This isn't a new paradigm, but it ... is a viable business model."
Despite this favorable prospect, he said, Modern Bank has an uphill battle to recruit customers, most of whom already have banking relationships.
