Private Banking in Europe

Private Banking in Europe

Private Banking in Europe

Private Banking in Europe

Synopsis

Private Banking is one of the highest growth and most profitable financial businesses in Europe. This book provides new insights into the private banking industry, its growth and future, and emerging opportunities for private bankers and their clients.

Excerpt

To start at the beginning: what is private banking? Definitions abound: the provision of wealth management services; wealth protection for the high net worth individual (HINWI); the offering of investment services and products to support wealthy individuals’ needs. Most people in the banking sector understand that private banking is at the far end of the scale from retail banking; it is something which rich people will happily pay for, in the expectation that they will preserve and possibly increase their fortune.

Some definitions of private banking show a growing reliance and emphasis on private banking ‘products’, an approach carried over from the mass market and the corporate sector, both of which are transaction-oriented. This is one thing that private banking is not.

In truth, private banking is any service the client wants it to be. Be it wealth management, money transmission, portfolio management, the delivery of a yacht or walking the dog, private banking is the ultimate client-led business.

Originating in the mercantile economies of the Renaissance, private banking is the oldest manifestation of money management. When the Dutch republic accepted the validity of trade and commerce, it also established the basic needs of its traders, those successful progenitors of modern business. They required a bridge between trade and finance—ways of keeping their family fortune safe, of raising loans, of investing wisely. Through the centuries, wealthy folk turned to bankers for help not only in managing their affairs, but also in exploiting the commercial value of their inherited land.

With industrialisation came a greater need for finance capital, and many of the Swiss private banks originated as houses organising the financing of infrastructural labour. The Genevan banks identified an early need to specialise, and went for the top end of the market as deposit banks—looking after their private clients.

During the twentieth century, political and ideological developments, and the increasing efficiency of instruments of destruction during the two world wars, created enormous growth in the need for lending. Banks grew, as did . . .

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