MiFID to deal private banking blow

A new study suggests MiFID could impact revenues at private banks. Will pay be affected?

The study by JPMorgan predicts some private banks which operate within broader investment banks could see revenues suffer following the implementation of the Markets in Financial Instruments Directive in November 2007.

Under the transparent conditions of MiFID, the study says banks will be less likely to execute private banking trades through in-house investment banking trading teams, and more obliged to direct trades to the most cost effective third party providers.

The study identifies both UBS and Credit Suisse as likely to lose out under the new arrangement. However, it says UBS will suffer most because a higher degree of its private banking trades are currently executed on a captive basis. The report puts the impact on the bank's revenues at a hefty 540m (€800m).

UBS was unable to comment on the issue.

Dudley Edmonds, a director at private banking search firm Culliford Edmonds, says private bankers could take a hit. 'Private banks which place their trades in-house will be getting a preferential brokerage rate. Once that ends, their private bankers could find themselves out of pocket."