ING Private banking aims to double in 3 years

By Reed Stevenson

GENEVA (Reuters) - The private banking business of Dutch financial services group ING Groep NV (ING.AS: Quote, Profile, Research, Stock Buzz) is aiming to almost double its assets under management in three years, the deputy chief of the unit said on Wednesday.

That growth in assets, from 55 billion euros ($70 billion) in mid-2006 to 100 billion euros, will come from a growing class of wealthy individuals in Asia and also through acquisitions, ING Private Banking Deputy Global Executive Bernard Coucke told the Reuters' Wealth Management summit.

"Our ambition is to become a top-20 player," said ING's Coucke. "For me the floor of that is 100 billion euros."

Adding that ING Private Banking's goal was to reach that threshold in three years, Coucke also said that he wanted the business to make up a higher percentage of the ING's underlying pretax banking profit, at least double the current level of four percent.

That's in line with many other larger banks with private banking operations, but contrasts sharply with the two market leaders, Switzerland's UBS (UBSN.VX: Quote, Profile, Research, Stock Buzz) and Credit Suisse (CSGN.VX: Quote, Profile, Research, Stock Buzz), where private banking generates more than a third of profits.

"Part of that (100 billion euros) target is acquisitions," Coucke said. "The executive board has accepted the idea of an acquisition. But we will only do an acquisition in an intelligent way... silly prices we will never pay."

"We only will buy something that will bring us added value," Coucke said, but said that any acquisitions would only be limited to businesses smaller than ING Private Banking.

In the second quarter, ING Private Banking had an inflow of 800 million euros. It posted underlying pretax profit of 59 million euros, about 4 percent of total banking operations.

TAPPING INTO NEEDS

Recent research by Bear Stearns showed that the global fee pool for catering to the needs of millionaires and billionaires could top $200 billion by 2010 -- more than three times the income available in investment banking.

ING Private Banking's clients, on average, have assets in the 1 million to 5 million euros range, a class of clients within a segment usually referred to as the "mass affluent." High net worth individuals have assets between 10 million 30 million euros. Above that, clients are considered "ultra high net worth."

Coucke said that ING Private Banking would add about 250 new staff to drive growth and serve the needs of newer, wealthier clients, particularly in Asia.

"We're recruiting 250 people, most will be client-facing, globally," Coucke said. "Asia is growing enormously, but the Asian market is a very difficult one, especially on recruiting good people."

Asked if this was putting pressure on costs, Coucke said that ING was making a concerted effort to bring down costs after the business was consolidated into a single group from various parts of the company.

"Our cost/income ratio (currently) is 59 percent," Coucke said at the summit in Geneva. In the second quarter, ING Private Banking's cost income ratio came in lower from a year earlier at 63 percent from 69 percent.  Continued...