F Scott Fitzgerald made the observation that "the very rich are different than you and me." Well, the mega-banks think so anyway.
As opportunities like corporate lending and M&A become more competitive because investment banks like Goldman Sachs are moving in, serving the wealthy is an attractive platform for making money. Bank of America is buying US Trust from Charles Schwab for $3.3 billion in a sign that it wants to compete with JP Morgan and Citi in the market of people who own their own jet airplanes.
Not surprisingly, firms like Goldman want to expand into the "rich people" business as well.
And, so, Wall St. has to ask whether Bank of America is buying at a top.
DeutscheBank is entering the private banking market in China.
So is Societe Generale
And, entrenched leaders like Swiss firm UBS are bolstering their private banking operations as the number of wealthy people around the world increases.
Bank of America may find that private banking is a bit more competitive than they planned.
And, Schwab may have exited at the right moment.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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