Private Banking

What is Private Banking?

Private banking refers to a suite of services offered by a bank to high net worth individuals (HNWI) designed to grow wealth.  Most of these wealth management strategies in banking and investment are reserved for HNWIs with at least EUR 500,000 in assets.  Clients with such considerable assets are more likely to be capable of utilizing financial solutions that require large investments like hedge funds and real estate. These services may also include specialized financing options, retirement planning, succession planning, and taxation solutions. 

Although bank customers with assets topping EUR 50,000 may be able to take advantage of some of these services, banks usually reserve private banking to individuals with the means to benefit from an array of specialized financial solutions.  The key benefit of private banking is the personalized service that comes from having an individual account manager.  This account manager is often available to the client and provides wealth management strategies that are customized to their situation.

It is not quite apt to define private banking as wealth management, because private banking generally offers a much narrower set of financial options.  A private banker offers strategies that can be applied to the assets the bank can access, while a more comprehensive wealth manager would develop broad strategies that include all of a client’s assets.

Private banking may be differentiated into two types: active and passive.  Active private banking involves constant input and decision making from the HNWI, while passive allows the bank to manage the assets without substantial direction.  Most private banking in the past has been of the passive variety, but recent turmoil in financial markets has ushered in an era of more active management from clients who wish to be more involved in the management process.

Benefits of Private Banking

Private banking is able to provide unique benefits to clients with substantial assets, and is often used to attract this class of clients to commercial banks.


As the name implies, the services offered to the client remain largely confidential.  This anonymous approach has had the stigma of underhanded dealings in the past, but most modern banks prefer to keep their activities with exclusive clients unpublicized for a variety of reasons.  Many tax shelters that limit exposure to taxation may be utilized legally but may contribute to negative public opinion.  Furthermore, many of these strategies are proprietary and banks seek to limit their adoption by competitors.

One-on-one service

The assignment of a relationship or account manager to handle a client’s assets allows the client to have access to a mid-level to upper management official without having to go through the customer relations staff first.  This easy access minimizes any obstacles to providing input on investment or wealth management decisions and allows the bank to develop strategies that are unique to client’s financial situation. 

Discounted services

The considerable assets that a HNWI brings to a banking institution is often rewarded by the bank by providing services like tax preparation and planning, travelers checks, or corporate checking at discounted rates.  Many other services like real estate investments that may only be available to customers with considerable assets may be discounted through the use of personnel associated with the bank. Many of these services are often highly prioritized by the bank and are processed expeditiously.

High returns

Because banks devote highly trained staff and enormous resources to the management of HNWI accounts, most of these accounts receive returns on their investments that consistently outperform the market.  According to some reports, private banking can yield returns up to 30 percent annually, but range more typically from the 7 to 13 percent range.  This spectacular performance is often attributable to access to high return investment opportunities like hedge funds.

Private Banking Value Proposition

  • Parent brand
    • Bank services as a part of a parent group
  • Unbiased advice
    • “Open” product mentality, means products are not proprietary
  • Strong research and advisory teams
  • Unified platform
    • Ability to comply with all regulations, while serving the client without restrictions

Private Banking Services

  • Asset management and growth
  • Investment management and planning
  • Financial future planning
  • Family wealth management
  • Day-to-day banking
  • Secure storage, Private secretary, Special credit card, Priority customer service