Competition in the private banking market is expected to increase with the decision of Gandon Capital Markets to set up a new unit catering for high net worth individuals.

The company is currently advertising for staff for the unit. Private banking involves providing personal investment and wealth management and other banking services to high net worth individuals.

In a booming economy the value of assets has risen sharply while more individuals have generated large amounts of cash through the sale of family business, shares in companies or other assets. This increase in individual wealth has lead to an increase in the demand for wealth management services while at the same time the number of banks and other financial institutions servicing the market is increasing.

Gandon, whose takeover by the South African group Investec is expected to be completed by the end of March, plans to expand all its Irish operations rapidly and expects to double its current workforce of 68 people within three to six months. In addition to a new private banking unit, the group is expanding its structured finance and corporate activities. Gandon head of private banking Mr Eddie Byrne said Gandon has been doing some personal business for high net worth individuals for some time but that this was mainly the provision of credit facilities. "About half of our loan book would be to private individuals for property and other investments," he said.

Because private banking is one of the core businesses of Investec, the company has decided to split off its existing lending to high net worth individuals into a new unit and to use this business as a platform to build up a strong private banking business. In additional to loans, Gandon will offer clients structured investments and over time will add a full suite of investments products, Mr Byrne said. "We are building our capacity" to offer a value adding service to clients. "This is still a very new business strategy and it is still being formulated so we will develop it as we go along and we are researching what the typical private banking client wants," he said. Gandon has not set minimum wealth criteria for its private banking clients - current criteria in the market range from clients who can do at least £0.5 million to £1 million worth of business or have net assets, other than the family home, of £1 million.