This publication talks to wealth and private banking senior managers at the US bank, who intend for this side of the business to become more important in contributing to overall results.

One of the major regional banking groups in the US, Ohio-headquartered KeyBank, is looking to increase the importance of wealth management to its bottom line and make the most of existing bonds with business owners that have long been a bedrock client base, executives say.

KeyBank is present in 15 states, ranging from Alaska in the northwest across to Maine in the northeast of the US.  Its private banking arm has more than 27,000 high-net-worth and ultra-high-net-worth clients in the US and holds $37.4 billion in assets under management and $36 billion in assets under administration. KeyBank isn’t one of those firms that has made big headlines via business acquisitions and lots of flashy M&A, but it is prepared to do deals if the circumstances are right, its executives say. Last year KeyBank completed its acquisition of First Niagra Financial Group, a deal adding a bank with a strong middle-market cohort of business clients for Key Bank.

And the firm is building up its Key Private Bank operation and, within that, its Key Family Wealth arm that works with multi-generation business owners. All told, the Key Family Wealth business serves more than 100 families, translating into about 500 relationship points in total. 

The Key Family Wealth business and the private banking arm as a whole are going to become increasingly important slices of Key’s overall pie, Terry Jenkins, head of Key Private Bank and Gary Poth, head of Key Family Wealth, told this publication in an interview.

“We’re in a really nice position to have scale and to have a great commercial and community bank to leverage.” Jenkins said. 

While the Buckeye State may no longer be quite as full of the industrial titans such as J D Rockefeller that made Ohio famous globally over a century ago, this region, as well as many other parts of the US in which KeyBank operates, have plenty of the kind of family-owned firms booking $50 million to $500 million of revenue that make for good clients, his colleague Poth said. Such clients are “ideal” for Key Family Wealth - about 70 per cent of them first come into its orbit via the commercial banking side, Poth continued.

A distinctive characteristic of Key Private Bank is that its clientele seem to be very much part of the American business class; its Ohio roots put it in touch with the kind of industrialists that resemble in some ways the SME “Mittelstand”-style businesses that one finds in Germany and which have close ties to often relatively obscure but long-standing lenders in that European nation. Key’s roots, in fact, go back to the Cleveland Trust Company, founded in the Gilded Age time of 1894 when the US was overtaking the UK and Germany as the industrial powerhouse of the world. The bank remains proud of its heritage for business and technology. (Fun fact: more astronauts have come from Ohio than any other state in the US.)

So how important is the private bank to the overall banking group? At present, according to first-quarter figures, KeyBank’s “other segments” (the portion containing the private bank) made $28 million in revenue in Q1, dwarfed by a total of $1.506 billion; income was $21 million, versus a group-wide total of $324 million. The private bank, therefore, has considerable headroom in delivering more to its parent’s bottom line. Key Family Wealth oversees a total of about $12 billion in assets under management, providing family office-style services; some of the family clients span five or more generations. With family offices still a growing area in the US, that is a business that also has upside potential. To be a KFW client requires at least an net worth of $25 million.
 

Busy times
This organization has made a number of senior hires, such as naming Joe Calabrese to the slot of national head of investments in May last year, coming across from Geller Family Office Services, for example, as well as George Mateyo, chief investment officer, having previously been CIO at Cleveland Clinic. He joined the bank in December last year. There have been a raft of other senior appointments across the US. Other appointees of recent months are Greg Dienna, director of investment consulting, Key Family Wealth; Tom Scaturro, senior market leader, Florida and Hudson Valley/Metro New York, Key Private Bank, and Virginia Kuper, senior vice president and market leader, Hudson Valley/Metro New York, Key Private Bank.

Growth has been robust, and Poth said that the private bank/wealth business finds itself “with a full set of books” it will need to bring in more people.

The executives like to stress a team ethic at the bank. “There are a lot of different personalities here and you have to be a good team player here,” Jenkins said. “They are all problem-solvers,” he continued.

The men argue that no one person in wealth management can provide expert advice on every subject, so it builds teams, led by a local advisor, and comprised of experts across disciplines, who work closely with the client.

The bank doesn’t target a specific ratio of staff per client; that will depend, the executives said, on the size and complexity of a client as well as other factors. As with other firms, digital technology is changing bank/client interactions.

The hard details
Poth said his colleagues work with business owners around issues such as how to prepare a firm for sale, such as taking some of the risks out of business, preparing for a liquidity event, getting a structure in place to handle transfers of wealth to other generations, and so on. “We have really focused on that work in the last couple of years,” Poth said.

“What we ask clients in this situation is this: `What do you want to be known for in a generation from now?’” Poth continued. Key Family Wealth and the wider bank provide education services for families around these business/private wealth issues, help with family foundations, and relatively recently, added accounting services to support business families, he said.

Being part of a larger parent with retail and commercial banking operations means that the private bank already has an existing and future pipeline of clients when it comes to overseeing wealth; it also takes on board those from outside the KeyBank universe.