More banks eye specialty services for Silicon Valley / San Jose Business Journal
David Goll, Reporter
January 13, 2012

John Bahnken, a senior executive vice president at Bank of the West 

John Bahnken, a senior executive vice president at Bank of the West, said the bank is ramping up its wealth management division that caters to clients with investable assets between $500,000 and $25 million.

Sluggish economic conditions and increased banking regulations that have cut into profits are driving banks into the arms of wealthy clients.

Though some of the biggest organizations have catered to high-net worth individuals for years, the concept is expanding into small- and medium-sized banks, such as Bank of the West and JPMorgan Chase & Co.   

Since April, San Francisco-based Bank of the West, with $59 billion in assets, has opened five Wealth Management Centers in its 735-branch chain. They include downtown San Jose at 50 W. San Fernando St. and another at 414 S. California Ave. in Palo Alto. Another three will open this year. Bank of the West has 3 percent of Silicon Valley’s market share.

“We are ramping up our program,” said John Bahnken, who oversees Bank of the West’s wealth management division as senior executive vice president. “We have been in various forms of wealth management for years, but decided to offer our services for high-net-worth individuals in a more cohesive way.”

Its wealth management centers are typically about 7,000 square feet and serve clients with investable assets of between $500,000 and $25 million with information and advice on what Bahnken called “integrated banking and investment” needs.

“The largest banks have long recognized serving the needs of the ultra high-net worth individuals and the wealthy is a profitable initiative for them,” said Maryann Johnson, senior vice president of wealth market management for the American Bankers Association, a Washington, D.C.-based advocacy organization for the nation’s $13 trillion banking industry. “They target those clients with specialized services and proprietary products in investments, cash management and loans. Now, mid-sized banks are getting into the game.”

Wealth management on the go

Johnson said those banks often tailor their wealth management services toward small business owners, who command growing wealth in the United States.

“These are customers closely aligned with private bankers,” Johnson said. “So (banks) have discovered that it makes sense to do market segmentation. These branches are not the wood-paneled offices some people would envision. These tend to be very high-tech oriented. These customers want to be served where they live or do business and to get in and out as quickly as possible.”

Bahnken said the wealth management world has changed.

“In the past, wealth management has meant providing help for clients in choosing investments, but now the world is very different,” Bahnken said. “People need more integrated banking and investment relationships with their financial institutions. First and foremost, this is an advisory-based relationship. We can help them figure out liquidity and investments, we can help them borrow money if necessary.”

Bahnken said the team available to customers at a Bank of the West wealth management center would be led by a private client adviser, backed up with assists from a trust officer, portfolio manager, investment manager, private mortgage adviser and even an adviser on philanthropic donations.

High-net worth competition

New York-based JPMorgan Chase, one of the nation’s big four banks with assets of $2.3 trillion and an 8 percent market share in Silicon Valley is aggressively expanding its Chase Private Client concept in new and existing branches throughout California, Florida, the Chicago area and the Northeast. The company operates 62 of those offices statewide. It plans to add up to 40 new Private Client locations in existing and new branches around Silicon Valley and the greater Bay Area this year, according to Jamie Reed, national director of Chase Private Client. The bankers and investment advisors work with customers who have investable assets ranging from $500,000 to $5 million.

“Our Private Client offices are in direct response to the needs of our existing clients,” Reed said, adding Chase had conducted a four-year pilot program to perfect this format. The services range from basic banking to specialized lending, investment and planning services.

One of the nation’s largest financial institutions, San Francisco-based Wells Fargo & Co. with $1.3 trillion in assets, has long catered to wealthy clients with specialized services in its “private banks” located within selected existing branches. Wells Fargo is Silicon Valley’s biggest bank, with 24 percent of the local market share.

Jeff Rademann, regional president for the bank, said private bankers team with Wells Fargo Advisors, services customers with at least $1 million in investable assets. The brokerage house has 15,000 financial advisors, to provide credit, insurance, investment and retirement services to these customers. Private bank operations are headquartered at locations in downtown San Jose, Palo Alto, Carmel, Walnut Creek, San Francisco and Marin County, he said. The 34 private bankers who work in Wells Fargo’s 65 Silicon Valley locations can meet with clients in any branch location, or even at a customer’s work or home, Rademann said.

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