Comment: JP Morgan gains Bear Stearns wealth unit
The private client business was one of the stronger parts of Bear Stearns
JP Morgan will inherit a US-wide private client unit with the acquisition of Bear Stearns that will add to the Wall Street bank's already strong wealth business in America.
Bear Stearns ran a private client business with revenues of around $830m and assets under management of approximately $30bn.
Despite a slight fall in revenues in the unit last year, fourth quarter 2007 results showed a 10% year-on-year increase in revenues.
Based in New York City and co-managed by Steven Dantus, the wealth unit has offices in most of the big US cities, as well as a branch in London, where it served clients with close links to its investment banking business.
Dantus led an aggressive hiring drive for the private client unit in 2005, but in recent years his authority within the firm appears to have lessened.
Last October, Dantus was forced to accept a co-head to manage the wealth unit with him, when Bear Stearns appointed Barry Sommers, who had helped run recruiting for the retail brokerage unit.
Little is known of the profile of high net worth clients at Bear Stearns, but analysts say most of them have assets of between $200,000 and $1m.
Bear Stearns also had some very rich clients, including Joseph Lewis, the UK-born billionaire, who was a client of Kurt Butenhoff, one of the bank's most successful private-client brokers.
Lewis bought a 9.6% stake in Bear Stearns last year and is understood to have lost about $800m with the sale to JP Morgan.
JP Morgan has one of the most successful wealth businesses in the US - made up of its private bank, servicing very rich clients, and its private client unit, aimed at affluent clients.
The bank managers around $480bn in assets for the rich - making it the 5th largest wealth manager in the world in terms of assets under management.
After a long period of uncertainty and turmoil, there might be many customers of Bear Stearns's private client unit relieved that their money will be managed by JP Morgan - at least for the time being.
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