Can clients and shareholders both win in private banking?

There are two types of banks – those that are good to work for and those that are good to own. Investment banks fall into the first category. They deliver huge financial rewards to their employees, who have succeeded through good times and bad in extracting extraordinarily high pay in return for risking shareholders' capital. If their bets pay off, they scoop a healthy chunk of the winnings. If they don't, bankers can lose only their jobs.

For shareholders, successful retail banks have tended to be a better bet. Professional managers at banks across the world have turned them into efficient processing and distribution machines and, with certain exceptions, have improved risk management to the point where they survived the recent credit downturn unscathed. New technology allows employee costs to be cut by outsourcing jobs...