Time was when private bankers were steely chaps with clipped Germanic accents and starched white collars. Their charge was to preserve family wealth from generation to generation against the ravages of war and financial upheaval. That was then. The most recent events mean that Asia faces yet another banking debacle. The business of managing extremely rich people's money is set to be unwrapped following the apparent breakdown of organisational systems within a leading bank. The question for Merrill Lynch is whether its prominent place in Asia's vast private banking market is undermined as a result. The industry as a whole faces painful self-examination with the old demon of internal controls once again top of the agenda. Investment banks under detailed public scrutiny have become an all too familiar sight. Merrill Lynch knows the heat of bad publicity, being a key adviser to the bankrupt Orange County. Yet, it is in Asia that many of the big banking fiascos of recent years have occurred. Those were dominated by traders, gambling institutions' own capital for profit. While fundamentally different, this case raises serious compliance and supervision issues. Moves to reorganise Merrill Lynch's private banking department must be considered nothing more than a minimum response after the event. For sure, it is difficult to prevent such things as forgery of signatures and documents. But what of the conditions breeding such behaviour? Failings within Jardine Fleming were only revealed after last year's fund management scandal. The breakdown of internal controls within Barings showed a similar pattern of poor supervision. Plenty of US investment bankers reckoned they were different. Coming from a tightly regulated market with sophisticated compliance systems it seemed that unauthorised trading was very much an Anglo-Japanese phenomenon. Perhaps, but US banks have left their own trail of debris in Asian markets over the past few years. During 1993 high-risk derivatives were sold to rich Asian investors but they blew up with the early 1994 bond market chaos. Many were charged with making inadequate disclosure of the huge risks to which investors were exposed. Herein lies the problem for the private banking industry in Asia. Most investors - being newly rich and still on the capital accumulation trail - want far more than to simply beat inflation. Distinctions between private and company money are often blurred. Many is the specially structured deal allowing company chairmen to raise funds against the value of their stock. Investment strategies are more aggressive. In markets where inside information is rife, clients are often as not looking for a good tip as a specially tailored product. Risk and reward may be well understood but the result is a very different business and inevitably very different individuals working in it. Private bankers in Asia get daily calls from anxious clients where they might not speak to their old-money charges for months at a time. The pressure to perform is huge, with all of the world's leading investment banks aggressively offering services. Asian investors are less likely to maintain single banking relationships, which only adds to the incentive to pursue riskier investment strategies to hold on to valuable accounts. In such an environment it is those with the closest relationships and entrepreneurial talent that will flourish. A perennial problem is finding qualified people with the right experience. That said, banks like Merrill Lynch have been long enough in Asia to instigate proper management controls. It could be argued that with their lack of brand loyalty and demands for short-term performance, Asian investors got the private banking industry they deserve. What seems certain is that bankers can expect long hard stares from clients wondering exactly where their money is invested, and in whose name.