Private banks are financial institutions which offer wealthy clients a range of products and services which extend from familiar retail banking-style facilities to more esoteric ones designed solely for the ultra net worth.
Private banks hold clients’ money and assets, and will often provide lending facilities (which may allow borrowing against property or your investment portfolios). They also provide a host of other services useful for high net worth individuals, like investment advice and financial planning. Many private banks also offer lifestyle-type services (also known as concierge) such as helping clients get their children into the best educational establishments or obtain access to world-class healthcare or exclusive events.
How it works
Private banking in its proper sense is two levels above retail banking; in between is what is variously known as “premier” or “priority” banking, which is intended for the mass-affluent market (but still comes under the gamut of wealth management). Premier banking is where investors start to get offered access to a wider range of services, but it is in private banking’s service standards that clients should really start to notice a difference. Personal, high-touch service is the hallmark of private banking; a client can expect to deal predominantly with one representative, often called a relationship manager, who should be intimately acquainted with their needs. Another hallmark of private banking is confidentiality. This is not to be confused with banking secrecy or hiding money away for wrongful purposes like evading tax. Rather, the confidentiality a private bank provides is intended to protect the interests of private clients. There may be myriad reasons why confidentiality might be a priority for a high net worth individual. Those from politically unstable regimes may fear the seizure of their assets or kidnappers exploiting knowledge of their wealth. For most, however, private banking is simply about discretion.The capabilities and expertise a private bank is able to offer will vary significantly according to its size, corporate structure and ethos. Some private banks provide a fairly narrow range of deposit, everyday banking and lending facilities; others, however, can form part of a full-spectrum wealth management offering which could include investment management advice and execution, financial planning and wealth structuring services.Private banks are in fact very active in investment management and financial planning today as these are a natural extension of their services. Equally, while some venerable private banking brands prefer to stay small and relatively under the radar, the global banking groups tend to have higher-profile private banking brands which might sponsor exclusive events and so on (this may well be attractive for some clients). Private bank services may include:
- Deposits and everyday banking facilities (although traditional cash accounts and cheque book facilities are increasingly rare)
- Lending against investment portfolios and property
- Managing investment portfolios with in-house investment expertise
- Wealth structuring/financial planning capabilities
- Lifestyle/concierge-type offerings (many private banks place great importance on hospitality too)
