Table of Contents:
Private banking
Private banking is a term for banking, investment and other financial services provided by banks to private individuals disposing of sizeable assets. The term "private" refers to the customer service being rendered on a more personal basis than in mass-market retail banking, usually via dedicated bank advisors. Historically private banking has been viewed as very exclusive, only catering for high net worth individuals with liquidity over $1 million.
An institution's private banking division will provide various services such as wealth management, savings, inheritance and tax planning for their clients. A high-level form of private banking (for the especially affluent) is often referred to as wealth management.
The word "private" also alludes to bank secrecy and minimizing taxes via careful allocation of assets. An offshore bank account may be used for this purpose.
Table of contents:
Trends in Private Banking
As the array of potential investment products widens, the job of a private banker is becoming increasingly complex. Private bankers need an understanding of financial products, from basic stocks and bonds to complex financial derivatives. An increasing proportion of their clients' wealth is now also invested in hedge funds.
At the same time, rich people are getting richer, and business is booming. A study by the Scorpie Partnership, a consultancy working in the wealth management (another word for private banking) sector found assets managed by private banks globally rose 13.1% in 2004 to more than $6 trillion worldwide. Profits rose by an average of 24% over the same period.
Unsurprisingly, this is prompting a surge of hiring. A survey by Gow & Partners, a headhunter with operations in the private banking sector, found 96% of private banks expect to hire more people to manage their client relationships in 2005-2006. Strong growth was expected in the UK, and banks said hiring globally was prompted in particular rise in the number of wealthy entrepreneurs.
At the same time, the private banking industry is going abroad. Traditionally, a high proportion of private banking assets have been held in secret "offshore" (typically Switzerland) bank accounts, which can offer tax advantages.
However, national governments and the European Union are clamping down on offshore money in an effort to root out terrorist finances and bring in more tax. Small Swiss private banks are suffering, and the biggest are investing heavily on developing their "onshore" businesses so clients across Europe can hold bank accounts with them in their own countries.
UBS, for example, has added over 450 private bankers in France, Germany, Spain, Italy and the UK since 2001.
The private banking servies offered by private bankers range from foreign exchange investments, portfolio lending, hedging strategies, day to day banking, estate planning, retirement planning, structured products, hedge funds, investment funds, liquidity management, trusts and wills.
Offshore banking is an important part of the international financial system. Experts believe that as much as half the world's capital flows through offshore centers. Tax havens have 1.2% of the world's population and hold 26% of the world's wealth, including 31% of the net profits of United States multinationals. According to Merrill Lynch and Gemini Consulting's “World Wealth Report” for 2000, one third of the wealth of the world's “high net-worth individuals”—nearly $6 trillion out of $17.5 trillion—may now be held offshore. Some $3 trillion is in deposits in tax haven banks and the rest is in securities held by international business companies (IBCs) and trusts.
Private Banking business models:
Private bank makes 0.8-1.0% on funds under management. So, if you bring in $100 million, the revenue to the bank is approximately $1 million. Of that, the individual banker can makes approx 30%, or $300,000. Salaries vary among firms, however. Some firms pay base salary plus bonus. While others pay no salary, but base on commission as outlined above. In many firms, the bankers commission goes to paying the team, secretaries, etc. While others its included. Some separate out the investor role, and others use % commission to hire investors.
Off shore banking has specific rules about whether or not you can have an office in the country. Tax evasion rules are important to follow.
In this section, we will explore the regional financial cluster of private banking in Miami, mostly geared towared wealthy Latin American clients
Private bank rankings
Best private bank for ultra high net worth ($30m+) 2007. This table displays results of one category of the Private banking awards.
Rank 07 Company Rank 06
1. UBS 1
2. Citigroup 2
3. HSBC 3
4. Credit Suisse 5
5. Merrill Lynch 8
6. Deutsche Bank n
7. JP Morgan Chase 4
8. BNP Paribas n
9. Société Générale n
10. ABN Amro 10
According to Scorpio Partnership's Annual Private Banking Benchmark for 2006, the largest private banking division is at UBS AG, followed by Citigroup and Merrill Lynch, each of these institutions gathering more than $1 trillion in assets under management for private clients.
Private banking institutions showed an increase in profits and assets under management in 2006 following a period of slow growth by 3.8% in 2004.
Locations of Private Banks
Switzerland is a major location for private banking. Swiss banks hold an estimated 35% of the world's private and institutional offshore funds, or 4.6 trillion Swiss francs
Luxembourg and Andorra,
Among offshore banks, Swiss banks hold an estimated 35% of the world's private and institutional funds (or 3 trillion Swiss francs), and the Cayman Islands are the fifth largest banking centre globally in terms of deposits.
In terms of offshore banking centres, in terms of total deposits, the global market is dominated by two key jurisdictions: Switzerland and the Cayman Islands,4 although numerous other offshore jurisdictions also provide offshore banking to a greater or lesser degree. In particular, Jersey, Guernsey and the Isle of Man are known for their well regulated banking infrastructure.
Offshore financial centres include:
Bahamas
Barbados
Belize
Bermuda
British Virgin Islands
Cayman Islands
Channel Islands (Jersey and Guernsey)
Cook Islands
Cyprus
Dominica
Gibraltar
Hong Kong
Isle of Man
Labuan, Malaysia
Liechtenstein
Luxembourg
Macau
Mauritius
Monaco
Montserrat
Nauru
Panama
Saint Kitts and Nevis
Seychelles
Singapore
Switzerland
Turks and Caicos Islands
for more: http://en.wikipedia.org/wiki/List_of_offshore_financial_centres
Private Banking Schools:
here are some specialized schools / universities focusing on the private banking industry:
Bocconi University & Citigroup Foundation Announce New Private Banking Course in Italy
Enhancing Financial Education Training for Italy’s Future Business Leaders
The Citigroup Foundation has approved a grant to finance the Private Banking course of Bocconi’s specialist academic degree in Finance.
“Together to enhance the culture of savings and investments in Italy”: This is the scope of the agreement signed by Bocconi University and the Citigroup Foundation for the financing of the “Private Banking and Institutional Money Management” course inside of Bocconi’s Master of Science in Finance/CLEFIN-LS.
The grant will finance the 2006-2007 teaching on the “Private Banking and Institutional Money Management” course, as well as a scholarship (taxes and expenses) for the top achieving second-year student.
More: http://www.citigroup.com/citigroup/press/2007/070219a.htm
Level II Master's Degree in Private Banking
Course not running
Duration 1 years
Controlling body Scientific Committee for the Master's Degree in Private Banking
Type Master's degree
Head quarters Verona
The Master's Degree in PRIVATE BANKING
Links
Financial Services Industry
http://www.dea.univr.it/dol/main?ent=cs&id=35〈=en
http://www.bmuniversity.com/bmu/index.php?option=com_content&task=view&id=34&Itemid=203
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