Morgan Stanley Latest to Expand Private Banking For the Rich

Wall Street banks are eager to lend big to the only credit-worthy segment of the population: the (still-) wealthy.

Morgan Stanley May Hire 500 Bankers in Lending Push
(7/1/2010 Bloomberg)

"Morgan Stanley, owner of the world’s largest brokerage, hired 100 bankers to offer more products such as jumbo mortgages and structured loans to Morgan Stanley Smith Barney clients and may quintuple their numbers by the end of 2011, a person with knowledge of the strategy said.

"The firm is building a private bank to squeeze more revenue from clients and encourage them to hold deposits at the company. Morgan Stanley’s wealth management group had $191 million of interest income in the first quarter, a fraction of the $1.1 billion at Bank of America Corp.’s Merrill Lynch unit. Private bankers offer loans, savings products and sometimes investment advice to a bank’s wealthiest clients.

"“There is always this hidden opportunity of cross-sell,” said Steve Stelmach, an analyst at FBR Capital Markets in Arlington, Virginia. “Merrill Lynch has been successful in offering mortgage products to their retail customers, so the precedent is there.”

"Morgan Stanley joins Citigroup Inc. and JPMorgan Chase & Co. in trying to do more business with wealthy customers as the weak economy and new regulations make it harder to earn money from loans and investment banking. Bankers have pushed cross- selling for decades, often with little to show for it, to expand their business without having to sign up new customers." [The article continues.]

The poor get poor, the rich get rich, that's how it goes, and everybody knows...

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