The Wealth Management Hunger Games

How Canadian banks are targeting rich Americans.

The Motley Fool

You may have heard about CIBC’s (TSX:CM, NYSE:CM) recent purchase of Atlantic Trust Private Wealth Management from Invesco Ltd. (NYSE: IVZ) for US$210 million.

This acquisition comes almost two years after CIBC purchased a stake in American Century Investments. The $848 million buy-in gave CIBC a foothold in the world of selling funds in US.

With Atlantic Trust, CIBC gained US$24 billion in client assets, and hopes to continue a track record of 26 consecutive quarters. With asset minimums of $5 million, CIBC is hoping this will help meet its goal of seeing wealth management make up 15% of the bank’s overall earnings.

But how does this stack up against some of its “Big 5” competition?

RBC

Through its U.S. division, RBC Wealth Management, RBC (TSX:RY, NYSE:RY) has managed to grow into one of the largest full-service investment, advisory and wealth management firms in the United States.

Currently the bank is sitting on $2,225 million in U.S. and international wealth management revenues, up from $1,977 million in 2012. These wealth numbers are helping to boost RBC’s total net profits from all of its American endeavors to $1,270 million in 2013. To give a comparison, its Canadian wealth management revenues last year were $1,889 million.

Scotiabank

Operating as Scotia Private Client Group, Scotiabank (TSX:BNS, NYSE:BNS) has also been busy in the past years. In its 2013 annual report, it stated that total revenue for its global wealth management division increased by 14%. That translates into 2013 revenues of $3,415 and $1,311 million in net profits, of which $480 million came from U.S. accounts.

BMO

BMO (TSX:BMO, NYSE:BMO) operates as BMO Nesbit Burns in Canada; in the U.S. it is known as BMO Global Asset Management. The budding U.S. segment contributed $200 million in net income, a staggering climb from the $84 million it earned last year.

In its Canadian wealth management business, the average account has about $4.9 million in deposits. This translated into revenues of $883 million, and an adjusted net income of $221 million. Globally, BMO saw a 59% increase in its wealth management net income, and an increase of $66 billion in assets under management.

Foolish bottom line

When it comes to high net worth asset management, all of these companies have managed to see great gains when they have invested down south. CIBC’s purchase of Atlantic Trust is only the newest in a continuing march for wealth management supremacy on both sides of the border.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Cameron Conway does not own any shares in the companies mentioned.

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