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American Express Bank
Refocusing a bank that operates up to four lines of business in 41
countries is a complex and difficult task. After working on this issue
for several years, we made substantial progress in shifting the bank's
focus from corporate clients to individuals and financial institutions.
This change aligns AEB's businesses more closely with the rest of the
company, and positions it to play a more important role in the delivery
of financial services on a global basis. We believe this shift also
should help stabilize AEB's performance, lower our risk profile and
develop opportunities for greater cross selling with our international
payments businesses.
AEB reported net income of $29 million in 2000, compared with $22
million a year ago, and the bank's return on equity improved. Year 2000
results reflect a 19 percent increase in commission and fee revenues in
the Financial Institutions Group (formerly Correspondent Banking),
Private Banking and Personal Financial Services (PFS) businesses. The
results also reflect lower operating expenses that resulted from
reengineering initiatives.
Our strategies for Private Banking and PFS continue to deliver positive
results. AEB consumer and private banking loans comprised 41 percent of
total loans at year-end 2000, up from 35 percent a year earlier. Private
Banking holdings increased by 12 percent during 2000. In addition to the
personalized products and services we offer wealthy clients through the
Private Bank, our PFS products provide affluent clients in important
markets with a broad range of credit, investment, savings and
transaction products delivered through phone, fax, mail and the
Internet. In 2000, PFS client volumes were up by 19 percent for the
year, and more than 60 percent of PFS customers are American Express
Cardmembers.
We introduced three new investment alternatives within the American Express Fund family: Global Innovation and Focused U.S. Equity (both managed by AEFA) and a Global High-Yield Euro debt fund. Additionally, AEB launched a third portfolio in its offshore hedge fund family, the Global Long-Short Fund-of-Funds. These products are marketed to wealthy individuals through the Private Bank.
AEFA-Managed Assets at AEB
American Express Bank (AEB) is increasingly marketing products managed
by American Express Financial Advisors to its Private Banking clients.
At year-end 2000, $6.7 billion in AEB client assets was held in
AEFA-managed funds. The AEB/AEFA relationship dates back to 1989, when
IDS certificates of deposit were adapted for the bank's wealthy
clientele.
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