The global private banking sector has the potential to grow by 60 percent if it can get hold of about $10 trillion in untapped wealth, held back by depressed returns and lack of investor trust, Scorpio Partnership said.

UBS is still the world's No. 2 wealth manager, behind Bank of America and ahead of Morgan Stanley , despite a damaging tax probe and bleeding client money in 2009, the 2010 Global Private Banking study from the wealth management consultancy showed.

The top players control the largest piece of the wealth pie. However, size alone may not be enough to win new assets as the credit crisis and a string of scandals ranging from the Madoff swindle to the UBS tax evasion case in 2008-2009 are keeping potential rich customers away.

Low returns and banks' inefficiencies are also playing a role, 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 in investible assets belonging to high-net worth individuals -- those with at least $1 million to spare.

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, she said.

Capturing these assets is the real answer for industry recovery.


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, Scorpio's Tillotson said.

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

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

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

Royal Bank of Scotland and Switzerland's Pictet joined the ranks of the top 10 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 Karen Foster)