Private banking operations like Northern are rolling out so much red carpet in Florida it's a wonder the wealthy don't have rug burns. High-net-worth banking has been big business in the state ever since Standard Oil founder John D. Rockefeller, the world's richest man, bought a retirement home in Ormond Beach in 1918. Now, flight capital from Latin America and bull market gains from the 1990s -- along with the Florida staples of sunshine and no income tax -- have combined to bring a bumper crop of affluent people here.
Today, the state has 368,000 households with more than $1 million in net worth each -- not including their residences, says Jeff Close, director of marketing at Chicago-based Spectrem Group.
Worldwide, the "wealth" market is growing faster than the overall banking market. For bankers, the rich are much more attractive because they generate more profit than customers with lower net worths. "Everybody's trying to figure out what the best way is to crack that nut," says David W. Hunter, senior vice president and manager of private banking at SunTrust Bank Central Florida.
Indeed, the nut-crackers include private banking units of regional and national banks, old-line institutions like Northern, Bessemer Trust and Wilmington Trust and newer entries like the de facto private banking arms of Merrill Lynch, Goldman Sachs and other investment houses.
Driving much of the competition was the Gramm-Leech-Bliley Act in 1999 that eliminated the Glass-Steagall prohibitions against banks, securities firms and insurance companies from affiliating. "That has unleashed a tremendous amount of competition," says Diane Ashley, Bank of America's senior vice president for private
banking in Miami-Dade and Monroe counties.
That competition put a premium on experienced handlers of the wealthy. "People are always looking to poach the best employees of the other firm," says J. Patterson Cooper, president and CEO of Bankers Trust Florida, part of the Deutsche Bank Group.
Citigroup Private Bank in Palm Beach earlier this year landed Rich Ditizio and six private bankers from Chase Manhattan. Citigroup's Florida private bank managing director, Hunt Deutsch, himself jumped in April from SunTrust after 20 years there.
In general, private bankers can reap bonuses in the seven figures by changing shops. They're expected, in return, to add $1 million to $2 million a year to their new firm's assets under management. "It's a little like a professional sports player," says Dominique Virchaux, who heads recruiting for global wealth-management firms for headhunter Spencer Stuart in Coral Gables. "They all have the same product. The only difference is the people."
Not that they don't try to differentiate. Rockefeller & Co., for example, focuses on the top end of the global market. The average investable assets of client families is
$35 million, says CEO James McDonald in New York.
Citigroup's Deutsch feels well-armed by his institution's geographic and product reach. If a client needs a yacht slip in Monaco, Deutsch can call a Citigroup employee there. He can steer a client to sports team financing experts, derivatives designers and even arrange a meeting with Citigroup Chairman Sandy Weill and Vice Chairman and former U.S. Treasury Secretary Bob Rubin. Heady stuff. "Quite candidly that was something I never experienced" while with other banks, Deutsch says.
The bottom line remains high-level service -- even when it takes a plebeian turn. Northern Trust Managing Executive Jack Nickels recognized that the company's Weston office would serve a younger clientele who might at times prize convenience and speed over the personal touch. So he had a drive-through included in the branch's design and an ATM, even though 80% of Northern customers traditionally don't ask for an ATM card. The ATM machine is "a big deal at Northern. Very few offices have them," Nickels says. "I had to fight for it."
International Banking
Growing Sophistication
Florida remains a key location for international banks, but turmoil abroad and industry consolidation have left the industry's asset growth here flat in recent years. Assets at international bank agencies in Florida have held steady at $19 billion since 1999, according to the Florida Division of Banking. That follows years of dramatic growth. International banks held only $11.4 billion in assets in Florida in 1994.
The recent slowdown in asset growth can be traced to upheaval offshore. Japanese banks -- and their assets -- largely exited the state because of Japan's troubled economy. Several European and Latin American players zeroed out here as well. Others were consolidated or reorganized. Banco Bilbao Vizcaya Argentaria once was three separate institutions, and now it's added a fourth -- BBV Banco Ganadero.
All told, the number of licensed agencies and offices of foreign banks has fallen to 51 in Florida, down from 69 in 1995, says Dave Devick, a financial analyst with the state Division of Banking. The institutions still here, however, are doing increasingly sophisticated business -- like managing offshore mutual funds and merchant banking, says attorney Bowman Brown, an international banking expert with Shutts & Bowen in Miami. And bank balance sheets don't reflect a surging market in international private bank management of the assets of high net worth foreigners, Brown says. "The international private bank business is booming," he says.
Indeed, in April, Banca Sella, a holding of Italy's wealthy Sella family, opened an office on Brickell Avenue in Miami to serve the families of Italians who immigrated to Latin America in the last century. Banca Sella's opening is part of a recent increase in new institution licensing activity that the state's Devick has observed. Miami is a convenient location for Banca Sella because it's more contemporaneous with time zones in Central and South America. And many Italians stop over in Miami to shop and tour while traveling to Italy. "We do private banking mostly," says Daniele Conci, vice president of Banca Sella. "The main reason the international agencies are in Miami is to (provide) private banking."