Boom time for private banks as profits soar

PRIVATE banks had a bumper 2004 - their best year this decade - raising their profits by a staggering 24% in US dollar terms.

According to wealth management consultants, many private banks have restructured their business, and continued cost cutting has had a direct effect on the bottom line.

At the same time, a gradual improvement in financial markets around the world has seen clients increase the amount they invest through private banks.

Total funds under management on which private banks charge fees is now more than $6 trillion (£3.2 trillion).

Sebastian Dovey, Scorpio's managing partner, said: 'The private banking industry is firmly back on its feet for the first time this decade. The figures indicate that repositioning at many firms is now feeding through to the bottom line.

'Sensible business models combined with upgrading the front office to secure high-quality assets should mean, markets permitting, that this time the trajectory will be sustainable.'

UBS remained the biggest private bank in the world with $1.3 trillion of assets under management, some way ahead of Merrill Lynch which was in second place with $1.03 trillion.