Rich investors in the US and in Europe lost $2.6 trillion (€2.66 trillion) - or six per cent of their wealth - in 2001's plunging markets, according to a survey.

The mountain of assets wiped off in just one year is roughly the size of the entire private banking industry in Switzerland, where wealthy client assets managed by banks are estimated at between $2 trillion and $3 trillion.

"Few investors or regions were untouched by the destruction," said the benchmark industry survey published by global management consultants Boston Consulting Group (BCG).

The survey gave no year-earlier comparisons, but said the drop in private banking profitability was unprecedented in 2001, with 69 per cent in the United States and 34 per cent in Europe, and there was no sign of recovery in 2002.

The downturn has exposed some inefficiencies in a crowded industry full of newcomers lured to the promise of easy profitability - in a fragmented market where the top 20 players account for only around 10 per cent of managed assets.

Brokerages were hit worst while larger banks that rely on fee income fared better. Small, independent private banks including many in Switzerland hurt more than their European counterparts with an average fall in profits of 43 per cent in 2001.

The survey said many banks were pursuing unprofitable low-balance accounts.

Reuters