U.S. News

American Express Expected to Sell Private Bank Unit, Source Says


New York-based credit card and travel services company American Express is expected to sell its private banking business within weeks, said a source familiar with the matter.

The sale, which could fetch between $1 billion and $2 billion, would be consistent with a worldwide trend in the wealth management industry towards increasing consolidation as the top players strengthen their hold.

"The sale of American Express Private Bank is likely to happen in the next few weeks," said the source. "It will be sold, most likely to a global institution.

"It's a significant one (sale) because it's one brand that disappears from the wealth management scene. The brand can't be sold."

American Express's private banking unit, with estimated assets under management of around $20 billion, offers investment services, deposit accounts, treasury services, loans, fiduciary services and insurance. It has a network of representative offices in Europe, Asia, Latin America, the United States and Canada.

"Any of the big banks in Europe could be interested. Private banking assets are hard to come by," said Simon Maughan, a banking analyst at Blue Oak Capital in London.

Banks such as Spain's Santander, Britain's HSBC Holdings and Royal Bank of Scotland Group were all eager to grow their private banking operations, as were Italian banks such as UniCredit.

Private banking sat awkwardly with American Express's core charge card and travel services businesses, said Maughan. "It is a premier card business and that does not mean you can run a private bank on the back of it," he said.

In a letter to clients on the private bank's Web site which appeared in May, American Express Vice Chairman Sergio Masvidal made no mention of any planned sale of the private banking business.

Masvidal also announced the opening of a new representative office in Bahrain and said American Express would be expanding its offering to clients of investment products.

The global wealth management business remains fragmented but is dominated by some very large players, such as UBS, Credit Suisse, Merrill Lynch and Citigroup.