Ailing private banking faces ‘moment of truth’

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"The coming year, 2009-2010, will be a moment of truth for the global private-banking model," said Sebastian Dovey, managing partner of Scorpio Partnership. "Asset levels have fallen by 16% but cost income ratios have risen by almost 14%, which places huge strain on the models of many banks."

He said many wealth management firms or divisions of bigger banks had carried on recruiting during the credit crunch while asset values had been falling. That meant they would be under increasing pressure to increase efficiencies in the coming year.

The shake-up in the banking world, particularly in the United States, saw many wealth managers change hands with Bank of America becoming the number one private bank in terms of assets under management after its takeover of Merrill Lynch.

UBS remained the second-largest wealth fund manager.