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Private banking
From Wikipedia, the free encyclopedia
Private banking is done by major institutional banks known as private banks, which offer financial services to private individuals. These banks would normally have two distinct divisions - private banking, and corporate banking.
Historically private banking has been viewed as very exclusive, only catering for high net worth individuals with liquidity over $1 million, although it is now possible to open some private bank accounts with as little as $50,000. An institution's private banking division will provide various services such as wealth management, savings, inheritance and tax planning for their clients.
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.
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The world's best private banks: Euromoney's annual private banking awards rank private banks and wealth management services by assets under management, profitability, ratio of clients to relationship managers and services offered. Results provide a qualitative and quantitative review of private banking services across a number of categories.
The top 20 global banks in the 2006 results reported increases in asset under management, with UBS Wealth Management succeeding in increasing AUM by 19%.
"A poll of the heads of business at the top 20 global private banks reveals three key determinants for the increase in AUM: improved portfolio performance, development of onshore business, and use of investment banking ties to attract a larger share of a client’s wallet.
With almost 68% of private banks charging percentage fees based on AUM, increased assets have resulted in improved profitability. Universal banking groups have therefore realized the value that private banking can offer."
Best private bank for ultra high net worth ($30m+) 2006. This table displays results of one category of the Private banking awards. [1] 2007 Awards released January 2007.
| Rank 06 | Company | Rank 05 |
|---|---|---|
| 1. | JPMorgan Private Bank | 1 |
| 2. | Goldman Sachs | 3 |
| 3. | UBS | 2 |
| 4. | Citigroup Private Bank | 4 |
| 5. | Credit Suisse Private Banking | 5 |
| 6. | HSBC Private Bank | 7 |
| 7. | Pictet & Cie | 6 |
| 8. | Merrill Lynch | n |
| 9. | Rothschild Bank | 8 |
| 10. | ABN Amro Private Banking | 10 |
Ranking: 'n' denotes 'nominated'
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[2].
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[3].
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[4].