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Barclays' president Bob Diamond has revealed his ambition to acquire a slice of the U.S. wealth management market. He said the U.S.' current financial market difficulties presented an unprecedented opportunity to buy a U.S. wealth management company and so to launch its growth plans in the country.

The announcement has provided the latest indication of how highly sought after such operations are in the current financial turmoil, particularly in light of the problems within investment banking and outflows from asset management, says Stuart Rutherford, senior financial services analyst, Datamonitor.

The news comes at a time of increased competition between wealth managers for clients and staff, whether in the EU, U.S. or Asia. Barclay's Wealth has announced the appointment of two senior appointments in Hong Kong and Singapore to its private banking unit. Pheabe Chau has joined as head of investment specialists in Singapore, while Anny Au Yeung joins as relationship manager in the group's intermediaries business in Hong

Kong.

Standard Chartered plans to increase its Singapore-based private banking operations staff by a third over the next three years. Swiss private bank Julius Baer has been hiring senior personnel from across Europe and Asia in the hope that they bring their clients with them.

However, despite the lure of wealth, profiting from high net worth clients is not easy, and success will depend on good strategies and excelling at the basics, says Rutherford. The U.S. market is an attractive proposition: it counts 400 billionaires and three million others with more than $1 million in liquid assets.

The task ahead for Barclay's is challenging. Already, Coutts, HSBC, Credit Suisse and Deutsche have all attempted to gain a foothold in the world's biggest onshore wealth market with acquisitions, but have failed to turn them into lucrative businesses. HSBC paid more than $10 billion for Republic Bank of New York; Credit Suisse acquired Donaldson Lufkin & Jenrette; Deutsche bought Alex. Brown & Sons, as a result of its acquisition of Bankers Trust; and UBS took over Paine Webber.

"It will be interesting to see whether

Barclays and other potential buyers find willing sellers for wealth management businesses," says Rutherford. Datamonitor's tracking of M&A activity shows precious few deals in wealth management during the first half of 2008, and the banks at the forefront of the sub-prime write-downs seem firmly attached to their wealth management arms. Even UBS, which last week announced the separation of its businesses into three autonomous units amid a rethink on the universal model, was at pains to stress that its wealth management business is a core part of its operations.

However, potential buyers in the market must be aware of the realities of the wealth management market. "While private banking may not be exposed to the risks and wild fluctuations of the investment banking and asset management businesses, it is not an easy area in which to make money," says Rutherford.

"Indeed, wealth management is a competitive market which goes through cycles, and its relationship-based nature means that those active in the space can suffer serious client withdrawals, as UBS has found out." The good historic performances of the private banks

were due, in large part, to the excellent market conditions that prevailed, but the market has now changed significantly.

Those that are to succeed in this changed market must have clear plans for mitigating the effects of the negative market cycle. Critically, they must understand that wealth management is a service business, and that they need to excel at the basics, like retaining staff and communicating with clients. Communication is particularly crucial in times of market volatility, and where this is not part of the bank's DNA, structured communication processes need to be put in place.

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