Personal trust is new hot growth area for banks

More and more people are exploring the less familiar world of trust banking, and finding the profit opportunities superior, they are shoving more and more of personal funds into trust accounts, fuelling an unprecedented expansion in the business.

Better described as the units within banks that do business for the client, instead of with the client, trust departments are enjoying an unexpected but welcome boom in the volume of business they do altogether, especially with personal investments. And they are providing the one bright spot in the otherwise gray earnings growth outlook of banks.

Industry and government data show that the flow of money pouring into trust products is growing about three times faster compared to that of deposits, and a surge in individual accounts as distinguished from corporate accounts, explain a large part of the phenomenon.

"People are being driven to hunt for better returns as the record low interest rates have virtually eliminated yields on the traditional haven for money which are deposit accounts. Trust products, given their superior returns and flexibility, are becoming the vehicle of choice even for personal savings," says Marvin Fausto, head of Trust Banking at Equitable PCI Bank.

He should know. His unit is the fastest growing trust group in the whole industry and is the top performer on generating returns on funds for this year’s second quarter, which is a major criterion for clients on deciding which bank they put their money in.