Banks give wealthy clients special care

By Richard Braddell

WELLINGTON - The rich are getting richer, and New Zealand banks are chasing them as never before through a new line of business known as private banking.

In the past year, most of the major banks have followed the lead set by the National Bank which opened a "private bank" in 1994 which now has 1500 customers.

The Bank of New Zealand has just opened a private banking service for so-called high net worth individuals earning more than $250,000 a year or with more than $500,000 in business with the bank.

Since 1987, BNZ has been offering investment advisory services aimed at high-value customers, but its private banking business offers a broader range of services, including specialised lending which it can supply from what its general manager, Alan Strang, calls "Koru Lounge" type suites in Wellington, Christchurch, and soon Auckland.

National's chief manager of private banking, Denis Kirkcaldie, said his bank's approach is distinct from the rest in that it is focused on wealth preservation. Dedicated staff get to know the customers very well, in a financial sense at least.

Typically customers tend to enter the private banking fold in their fifties. The mortgage is out of the way, children are off hand and wealth is accumulating rapidly, almost without trying.

National generally requires a private client to have investments valued at more than $250,000, or an annual income of $150,000.

Often businesspeople, selling up on retirement, hand over their affairs to the bank to manage, even when their working life has demanded strong financial skills.

Mr Kirkcaldie said a surprising number of the ageing wealthy with no obvious relatives had come to depend on the bank to organise support such as rest- home care.

In common with the BNZ, National offers its private bank customers separate banking facilities in six centres - Auckland, Tauranga, Wellington, Nelson, Christchurch and Dunedin.

National's private bank is based on a model similar to that of its British parent, Lloyds TSB.

Other New Zealand private bank operations have typically followed American models that include lending to the high net worth market, but National prefers the pattern developed by European private bankers in the last century, who set out to manage the wealth of royal and aristocratic families, creating intergenerational wealth.