Magazine article American Banker

Keycorp Bullish on Private Banking Business

Magazine article American Banker

Keycorp Bullish on Private Banking Business

Article excerpt

ORLANDO -- Keycorp is counting on strong growth in sales of financial services to the affluent, a senior executive said at an industry conference here.

Keycorp's New Units for Serving the Affluent

Private banking

Staff:

Specially trained branch employees

Clients:

The "emerging affluent" -- people with annual incomes of $75,000 to $100,000

Private banking and investing

Staff:

Teams of brokers, trust specialists, and private bankers

Clients:

Affluent individuals and families with annual incomes of at least $100,000 and at least $25,000 to invest

Wealth management

Staff:

Cleveland-based trust, private banking, and investment specialists

Clients:

Families and individuals with at least $5 million to invest

Currently, Keycorp, the country's 10th-biggest banking company, gets nearly one-tenth of its profits from lending, investing, trust, and deposit services for affluent families and individuals, said Daniel E. Klimas, an executive vice president and head of the personal financial services unit that deals with the affluent.

The Cleveland-based banking company expects this business to grow at a 20% to 25% annual clip for the foreseeable future, he added. Making such a claim means that Keycorp expects its fortunes to run contrary to the recent experience of other banks.

Payment Systems Inc., a Tampa market researcher, has found that banks received only 24% of the money wealthy Americans spent on financial services last year, compared to 34% in 1993. In absolute terms, banks' revenues in this area declined by more than 13% last year, to $14.9 billion.

Though Mr. Klimas said he wouldn't be surprised if banks, in general, were receiving less of the money the rich spend on financial services, he said that trend "isn't true at Keycorp."

He made these comments during an interview at a trust and private banking conference here sponsored by the American Bankers Association.

Keycorp, with branches spanning much of the northern half of the country, as well as Florida, was formed last year by the merger of Society Corp., Cleveland, and Keycorp, Albany, N.Y.

Mr. Klimas explained that one reason Keycorp's dealings with the affluent will grow is that the "demographics are incredibly favorable." In other words, as baby boomers age, they are said to be accumulating wealth that banks and other financial companies can help them manage. …

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