Private banking - Wikipedia

Private banking is banking, investment and other financial services provided by banks and financial institutions primarily serving high-net-worth ... Privatebanking FromWikipedia,thefreeencyclopedia Jumptonavigation Jumptosearch Fornon-incorporatedbankinginstitutions,seeprivatebank.BankingservicesforverywealthypeoplePartofaseriesonfinancialservicesBanking Typesofbanks Advising Banq Bulgebracket Central Commercial Communitydevelopment Cooperative Creditunion Custodian Depository Development Direct Exportcreditagency Investment Industrial Merchant Middlemarket Mutualsavings National Neobank Offshore Participation Payments Postalsavings Private Public Retail Savings Savingsandloan Universal Wholesale Bankholdingcompany Listsofbanks Accounts ·Cards Accounts Christmasclub Deposit Money-market Savings Timedeposit(Bond) Transaction(checking /current) Cards ATM Credit Debit Fundstransfer Electronic Billpayment Mobile Wire Cheque SWIFT SPFS Automatedclearinghouse Giro Terms Automatedtellermachine Bankregulation Loan Mobilebanking Moneycreation Banksecrecy Ethicalbanking Fractional-reservebanking Full-reservebanking Islamicbanking Privatebanking RelatedtopicsFinancialmarket (participants) Corporatefinance Personalfinance Publicfinance Financiallaw Financialregulation Listofbanks Category Commons Portalvte Privatebankingisbanking,investmentandotherfinancialservicesprovidedbybanksandfinancialinstitutionsprimarilyservinghigh-net-worthindividuals(HNWIs)—definedasthosewithveryhighlevelsofincomeorsizableassets.Privatebankingisamoreexclusivesubsetofwealthmanagement,gearedtowardexceptionallyaffluentclients.Theterm"private"referstocustomerservicerenderedonamorepersonalbasisthaninmass-marketretailbanking,usuallyprovidedviadedicatedbankadvisers.Atleastuntilrecently,itlargelyconsistedofbankingservices(deposittakingandpayments),discretionaryassetmanagement,brokerage,limitedtaxadvisoryservicesandsomebasicconcierge-typeservices,offeredbyasingledesignatedrelationshipmanager. Contents 1History 1.1Recentdevelopmentsinprivatebanking 1.2Wealthminimums 2Privatebankingrankings 2.1ByAUM 2.2Overall 3Valueproposition 4Productplatform 5Feestructure 6Leadgeneration 7Seealso 8References 9Externallinks History[edit] Privatebankingishowbankingoriginated.ThefirstbanksinVenicewerefocusedonmanagingpersonalfinanceforwealthyfamilies.Privatebankscametobeknownas"private"tostandoutfromtheretailbankingandsavingsbanksaimedatthenewmiddleclass.Traditionally,privatebankswerelinkedtofamiliesforseveralgenerations.Theyoftenadvisedandperformedallfinancialandbankingservicesforthesefamilies.Historically,privatebankinghasdevelopedinEurope(seetheListofprivatebanks).SomebanksinEuropeareknownformanagingtheassetsofsomeroyalfamilies.TheassetsofthePrincelyFamilyofLiechtensteinaremanagedbyLGTGroup(foundedin1920andoriginallyknownasTheLiechtensteinGlobalTrust).TheassetsoftheDutchroyalfamilyaremanagedbyMeesPierson(foundedin1720).[1]TheassetsoftheBritishRoyalFamilyaremanagedbyCoutts(foundedin1692). Historically,privatebankinghasbeenviewedasaveryexclusivenichethatonlycaterstoHNWIs—specificallythosewithliquidityover$2million,thoughitisnowpossibletoopenprivatebankingaccountswithaslittleas$250,000forprivateinvestors.Aninstitution'sprivatebankingdivisionprovidesservicessuchaswealthmanagement,savings,inheritance,andtaxplanningfortheirclients.Forprivatebankingservices,clientspayeitherbasedonthenumberoftransactions,theannualportfolioperformanceora"flat-fee",usuallycalculatedasayearlypercentageofthetotalinvestmentamount.[2] "Private"alsoalludestobanksecrecyandminimizingtaxesthroughcarefulallocationofassets,orbyhidingassetsfromthetaxingauthorities.Swissandcertainoffshorebankshavebeencriticizedforsuchcooperationwithindividualspracticingtaxevasion.AlthoughtaxfraudisacriminaloffenseinSwitzerland,taxevasionisonlyaciviloffence,notrequiringbankstonotifytaxingauthorities.[3] InSwitzerland,therearemanybanksprovidingprivatebankingservices.[4]SwitzerlandhasremainedneutralsincetheCongressofViennain1815,includingthroughtwoWorldWars.AfterWorldWarI,theformernoblesofAustro-HungarianEmpiremovedtheirassetstoSwitzerlandforfearofconfiscationbynewgovernments.[5]DuringWorldWarII,manywealthypeople,includingJewishfamiliesandinstitutions,movedtheirassetsintoSwitzerlandtoprotectthemfromNaziGermany.However,thistransferofwealthintoSwitzerlandhadmixedandcontroversialresults,asbeneficiarieshaddifficultiesretrievingtheirassetsafterthewar.[6]AfterWorldWarII,ineasternEurope,assetswereagainmovedintoSwitzerlandforfearofconfiscationbycommunistgovernments. Today,Switzerlandremainsthelargestoffshorecenter,withabout27percent($2.0trillion)ofglobaloffshorewealthin2009,accordingtoBostonConsultingGroup.[7]Offshorewealthisdefinedasassetsbookedinacountrywheretheinvestorhasnolegalresidenceortaxdomicile. InEngland,privatebankswereestablishedinthe17thcentury,inparallelwiththedevelopmentofagriculture,managingtheassetsoftheroyalfamily,nobilityandthelandedgentry. TheUnitedStateshasoneofthelargestprivatebankingsystemsintheworld,inpartduetothe3.1millionHNWIsaccountingfor28.6%oftheglobalHNWIspopulationin2010,accordingtotheco-researchofCapgeminiandMerrillLynch[citationneeded].SomeAmericanbanksthatspecializeinprivatebankingdatebacktothe19thcentury,suchasU.S.Trust(foundedin1853)andNorthernTrust(foundedin1889). Recentdevelopmentsinprivatebanking[edit] Theinternationalizationoftheeconomy,technologicaldevelopmentssuchastheInternetandmobilephonesensurethatbankshavetoinnovatetheirvaluepropositionandlookfornewmarkets.Forexample,thegrowthofHNWIsislowintraditionalprivatebankingmarketslikeEurope,comparedtoAsiawherethenumberofmillionaireshasgrownto3.6million.[8] Banksalsoprovideasamplingoftheprivatebankingservicesatalowerpricepointthantraditionalprivatebanking.Thesearecalledpremiumbankingorprioritybankingservices.Theyaremeantformass-affluentcustomers.Theaccountsdonotgenerateasmuchrevenueastraditionalprivatebanking,butgiventhenumberofcustomers,theyamounttoasizeablerevenuetothebank.Theproductsofferedtopremiumbankingcustomersarethesameasthatforprivatebankingcustomerswiththeexceptionthattheydonotincludehedgefundsorfacilitiestomanageone'sownbusinessaccounts.Inshort,itiswealthmanagementatamuchsmallerscale. In2016,CreditSuisseandUBSreplacedtheword"privatebanking"withwealthmanagement;privatebankinghasfacedreputationalriskasanareafortaxavoidanceoreventaxaversion.[9] Wealthminimums[edit] In2016,JPMorganbeganrequiringaminimumof$10millioninassetstoqualifyfortheirprivatebanking,withthosewithlessbeingmovedintotheirPrivateClientDirectprogram.[10] Privatebankingrankings[edit] ByAUM[edit] IntermsofAUM,theworld's10largestprivatebanks(orprivatebankingdivisions/subsidiariesoflargebankholdingcompanies),asof2019,are:[11] Rank Bankname Totalassets(2019)(US$Billion) 1 UBSGlobalWealthManagement 2,260.0 2 MorganStanleyWealthManagement 1,046.0 3 BankofAmericaGlobalWealthandInvestmentManagement 1,021.2 4 CreditSuissePrivateBanking&WealthManagement 770.0 5 J.P.MorganPrivateBanking 552.0 6 CitiPrivateBank 460.0 7 BNPParibasWealthManagement 413.5 8 GoldmanSachsPrivateWealthManagement 391.8 9 JuliusBaerGroup 379.1 10 RaymondJames 366.3 Overall[edit] ResultsfromEuromoney'sannualprivatebankingandwealthmanagementrankingin2019,whichconsider,amongstotherfactors,assetsundermanagement(AUM),netincomeandnetnewassets.[12]UBSGlobalWealthManagementtookthetopspotinEuromoney's2019surveyfor"Bestprivatebankingservicesoverall2019".[12] Thistabledisplaysresultsofonecategoryoftheprivatebankingranking,"Bestglobalprivatebankingservicesoverall2019".[12] Rank2019 Rank2018 Bankname 1 1 UBS 2 3 CreditSuisse 3 2 JPMorgan 4 7 BNPParibas 5 5 Citi 6 11 Santander 7 4 JuliusBaer 8 6 Pictet 9 9 GoldmanSachs 10 8 HSBC Valueproposition[edit] Mostprivatebanksdefinetheirvaluepropositionalongoneortwodimensions,andmeetthebasicneedsacrossothers.Someofthedimensionsofvaluepropositionofaprivatebankareparentbrand,one-bankapproach,unbiasedadvice,strongresearchandadvisoryteamandunifiedplatform. Manybanksleveragethe"parentbrand"togainaclient’strustandconfidence.Thesebankshaveastrongpresenceacrosstheglobeandpresentprivatebankofferingsasapartoftheparentgroup."OneBankapproach"iswhereprivatebanksofferanintegratedpropositiontomeetclientspersonalandbusinessneeds.Sinceprivatebankingconcernsunderstandingaclient’sneedandriskappetite,andtailoringthesolutionaccordingly,fewbanksdefinetheirvaluepropositionalongthisdimension.Mostmodernprivatebanksfollowanopenproductplatform,andhenceclaimtheiradviceisunbiased.Theybelievethereisnoincentivetopushproprietaryproducts,andtheclientgetsthebestofwhattheyoffer.Afewbanksclaimtohavea"strongadvisoryteam"thatreflectsintheproductstheyoffertheclient.Acoupleofbanksalsodefinetheirvaluepropositionontheirunifiedplatform,theirabilitytocomplywithallregulations,yetservetheclientwithoutrestrictions. Productplatform[edit] Openarchitectureproductplatformiswhereaprivatebankdistributesallthethirdpartyproductsandisnotrestrictedtosellingonlyitsproprietaryproducts.Closedarchitectureproductplatformiswherethebanksellsonlyitsproprietaryproductsanddoesnotentertainanythirdpartyproduct.Thesedaystheneedsoftheclientsaresodiversethatitispracticallyimpossibleforabanktocatertothoseneedsbyitsproprietaryproductsalone.Clientstodaydemandthebestofbreedproductsandmostbankshavetofollowanopenarchitectureproductplatformwheretheydistributeproductsofotherbankstotheirclientsinreturnforcommission.Productsofferedtoprivatebankingclientsincludeequities,fixed-incomesecurities,structuredproducts,foreignexchange,commodities,depositsandreal-estateinvestments.[13] Feestructure[edit] Differentbankschargetheirclientsindifferentways.Therearebanksthatfollowthetransactionalmodelwheretheclientisnotchargedanyadvisoryfeeatall.Thebanksthrivetotallyonthecommissionstheygetbydistributingthirdpartyproducts.Thereareotherprivatebanksthatfollowahybridmodel.Inthismodel,thebankchargesafixedfeeforcertainproductsandadvisoryfeefortherest.SomeoftheotherbanksaretotallyadvisorydrivenandchargetheclientsapercentageofAUM(e.g.0.75%ofentireAUM). Afewbanksofferbothatransactionalmodelandanadvisorymodel.Theclientschoosewhatsuitsthem.Arecentindustrytrendistowardstheadvisoryfeemodel,becausemarginsoncommissionsmaygodowninthefuture. Leadgeneration[edit] Mainarticle:Leadgeneration Leadgenerationisavitalpartoftheprivatebankingbusiness.Variousbanksgoaboutindifferentwaystoacquirenewclients.Whilesomebanksrelyheavilyontheirwholesalebankingreferralsthereareafewothersthathavestrongtie-upswiththeirretailandcorporatebankingdivisions.Mostbanksdohavearevenuesharingmechanisminplacewithindivisions.Itiseitheraonetimechargetothedivisionoranannuitythatthedivisiongetsforaclientreferral.Manybanksbelievethattheprimarysourceofleadsmustbeclientreferrals.Aclientwouldreferhis/herfriendswhenhe/sheissatisfiedwiththeserviceprovidedbytheprivatebank.Generatingagoodnumberofleadsthroughclientreferralsshowsthegoodhealthoftheprivatebank. Seealso[edit] Banksportal Publicbank Familyoffice Multi-familyoffice References[edit] ^"History".www.abnamro.com.Retrieved30March2018. ^"UnderstandingCostDriversandPricingModelsinWealthManagementandPrivateBanking-MyPrivateBanking".www.myprivatebanking.com.Retrieved30March2018. ^Whitlock,Craig(29March2009)."FacingPressureOverBanking-SecrecyTradition,SwitzerlandBracesforFight".Retrieved30March2018–viawww.washingtonpost.com. ^"SwissBanksBuckSecrecySqueezeWith$53BillionofInflows".14October2010.Retrieved30March2018–viawww.bloomberg.com. ^TheSwissbanksbyT.R.Fehrenbach ^Hitler'sSecretBankersbyAdamLeBor ^"TheOffshoreBusinessHasRecovered—butChallengesRemain".bcgperspectives.com.Retrieved30March2018. ^Hanson,Joyce."Top10CountriesWithMostMillionaires:Capgemini/RBC".AdvisorOne.Archivedfromtheoriginalon16January2013.Retrieved5July2013. ^"Thedeathofprivatebanking…".Euromoney.Retrieved2020-03-28. ^"JPMorganPrivateBank's$10MMinimumRattlesClientsandBankers".AdvisorHub.2016-03-22.Retrieved2020-03-28. ^ScorpioPartnership."PrivateBankerInternationalGlobalAuMranking".archive.org.4September2019.Retrieved4September2019. ^abc"PrivateBankingandWealthManagementSurvey2019:GlobalResults".Euromoney.Retrieved6February2019. ^"PrivateBanking".thebanks.eu.Retrieved30March2018. Externallinks[edit] AboutSwissFinancialCentrebySwissworld.org Businessweek:IntheBattleoftheBigBrokers,MerrillIsWinning Retrievedfrom"https://en.wikipedia.org/w/index.php?title=Private_banking&oldid=1061352477" Categories:PrivatebanksBankingDistributionofwealthHiddencategories:ArticleswithshortdescriptionShortdescriptionmatchesWikidataAllarticleswithunsourcedstatementsArticleswithunsourcedstatementsfromJune2017 Navigationmenu Personaltools NotloggedinTalkContributionsCreateaccountLogin Namespaces ArticleTalk English expanded collapsed Views ReadEditViewhistory More expanded collapsed Search Navigation MainpageContentsCurrenteventsRandomarticleAboutWikipediaContactusDonate Contribute HelpLearntoeditCommunityportalRecentchangesUploadfile Tools WhatlinkshereRelatedchangesUploadfileSpecialpagesPermanentlinkPageinformationCitethispageWikidataitem Print/export DownloadasPDFPrintableversion Languages العربيةCatalàDanskDeutschEestiΕλληνικάEspañolفارسیFrançais한국어हिन्दीBahasaIndonesiaItalianoLietuviųNederlands日本語NorskbokmålPolskiPortuguêsРусскийSuomiSvenskaతెలుగుTürkçeУкраїнськаTiếngViệt中文 Editlinks