The global private banking sector has the potential to nearly double its size thanks to about $10 trillion of untapped wealth that is still up for grabs, according to the Scorpio Partnership's annual benchmark.

But the industry, still led by Bank of America followed by Switzerland's UBS and Morgan Stanley , needs to work harder to woo new clients, as lower returns and inefficiencies are keeping potential rich customers away, the survey of about 230 wealth managers showed.

Private banks managed about $16.5 trillion at the end of 2009, up from $14.5 trillion at the end of 2008, mainly due to improved market performance.

The sector currently manages only 42 percent of the about $40 trillion of investible assets belonging to those with at least $1 million to spare, known as high-net worth individuals.

Based on our global research with thousands of clients and advisors, the realistic amount of bankable assets likely to be available to the industry is around two-thirds of the total, said Catherine Tillotson, a managing partner at specialist consultant Scorpio Partnership.

This implies there is approximately $10 trillion of high net worth assets that could be advised by banks.

Capturing these assets is the real answer for industry recovery, she said.


Although buoyant markets have boosted overall managed wealth held in 2009, private banks have struggled to attract new assets, the survey showed.

The banks surveyed have on average won about $900 million of new assets from clients, a 60 percent decline from the previous year. And this despite signs of new wealth creation, especially in emerging markets and Asia.

One of the big impacts of the financial crisis has been a loss of confidence among clients, said Tillotson.

A lot needs to be done in terms of transparency of investment services and products as well as keeping the client informed.

Contrary to popular belief, the survey also showed that the wealth management industry is a highly-concentrated sector.

The top five players, Bank of America, UBS, Morgan Stanley, Wells Fargo and Credit Suisse , control alone 41.5 percent of the market and are performing better than many niche players.

Royal Bank of Canada and Switzerland's Pictet joined the ranks of the top ten players for the first time in 2009.

Banks outside the top 100 are starting to show signs of prolonged suffering as net new money and real profits are in decline, said Stephen Wall, a director at Scorpio Partnership.

(Editing by Jon Loades-Carter)