New capital requirements for banks under revised Basel rules will make wealth management a more attractive banking business as it consumes less cash than other divisions of banking groups, senior industry figures say.

Proposed bank rules known as Basel III will oblige lenders to set aside at least 7 per cent of high-quality capital relative to risk-weighted assets, while at the same time setting stricter terms on what can be counted toward core capital.

"I think (Basel III) even helps the private banking side because as you might know we are not absorbing so much capital," Andreas Woelfer, head of private banking at UniCredit, told the Reuters Global Private Banking Summit.

The banking industry is facing the challenge not just of tougher Basel rules on capital but also new regulations in jurisdictions such as the US, which recently passed legislation forcing banks to split off some of their trading operations. In the EU, policymakers are looking to tighten regulations on hedge funds and other alternative investment funds.

However, although private banks may not be hit as hard as other parts of financial services by Basel rules, capital constraints envisaged under the new Basel III regime will affect lenders' ability to seal acquisitions as the industry stumbles toward consolidation, the head of ultra high net worth banking at UBS said at the same summit.

"[It] will definitely have an impact on acquisition targets," said Josef Stadler. "But whether it will affect negatively the UHNW segment or the way we run it, I don't know. I doubt it."

UBS and rival Credit Suisse face an even tougher regime now that Switzerland is asking them to hold 10 per cent of core bank capital, as well as an extra 9 per cent in other liquid financial instruments such as contingent convertible bonds.

This so-called "Swiss finish" may even burnish the image of the two banks after the global financial crisis led to a government rescue of UBS as well as an exodus of private clients.

"The 'Swiss finish' will lead to higher solvency... It will make the banks 'safer', if you wish," said Stadler.

(WealthBriefing editor Tom Burroughes has provided commentary on wealth management issues ahead of the summit on the Reuters Insider TV channel).