Enter private banking

Author: Lian Jianhui, Sun Huamin
Publisher:
Publish Date: 2006-07-01
Features: What is private banking? The entry of foreign private banks has attracted high attention from the domestic financial practice community. How far is private banking from China? As domestic household wealth accumulates, especially with the continuous growth of the high-income group, private banking services will inevitably become a focal point of competition between domestic and foreign banks. Domestic private banking services will also experience rapid development in the coming years. This book is well-researched and comprehensive, avoiding complex academic language as much as possible, and introduces the operations of international private banks in an easy-to-understand manner. It analyzes the latest trends in private banking with up-to-date data. Theoretical and practical insights are integrated, reflecting the rational thinking of researchers from the financial practice community on the development of private banking services in China. Private banking is a top-tier, specialized set of financial services for wealthy individuals, centered around wealth management. This book focuses on introducing the operational practices of 10 leading representative international private banks, such as UBS Group, HSBC Group, and Citibank; the product and service offerings, business processes, organizational systems, and management methods of international private banking; the operational status and emerging trends of international private banking; the development trajectory of retail banking in China; and the basic ideas for establishing a private banking service system in China. This book integrates theory and practice, reflecting the rational thinking of researchers from the financial practice community on the development of private banking services in China. Asset management is divided into three categories: self-directed asset portfolio management, non-self-directed asset portfolio management, and other investment services. Self-directed asset portfolio management involves individually managed accounts designed for customers, where customers do not need to participate in daily investment decisions. Instead, the private bank manages the client's assets in its entirety. Private banks manage assets strictly according to certain criteria, typically through a trust agreement reached with the customer, within which asset operations are conducted. Asset managers tailor asset portfolios for each customer to meet their personalized needs. This customized service is the biggest difference between private banking's asset management and asset management services provided by other financial institutions. When managing client assets, private banks adopt a comprehensive investment philosophy and construct a complete investment process. This process is generally divided into four stages: implementation observation, asset allocation, portfolio management, and operational evaluation and control. When conducting full-management asset portfolio operations, private banks typically invest in the following three types of assets: equities, fixed-interest securities, and cash or cash equivalents. For some clients, a fourth category—commodities—is also included. For clients with smaller portfolio sizes, private banks offer non-self-directed asset management. This is primarily composed of various investment funds, such as mutual funds, managed funds, and unit trusts. By using investment funds, private banks can effectively manage client assets, optimize small-scale portfolios, and integrate multiple assets to achieve economies of scale. The development and popularity of investment funds also reflect the trend of deposit products shifting toward investment products. In Switzerland, investment funds managed by private banks are also referred to as internal funds. Generally, internal funds manage assets for 300–400 accounts, with each account holding 600,000–2 million Swiss francs. For example, if the market value of Swiss stocks is high, small investors may find it difficult to enter the equity market. Through investment funds, private banks provide clients with a channel to invest. Investment funds come in many types, including actively managed funds, hedge funds, index funds, guaranteed-return funds, umbrella funds, and preservation funds. Other investment services in asset management refer to specific goal investments and luxury investments. Specific goal investments include financing leasing, affiliated companies, private equity investments, venture capital, and leveraged mergers. Luxury investments involve investing in paintings, porcelain, sculptures, fine art, musical instruments, jewelry, classic cars, and carriages. Clients who engage in luxury investments in private banking are often divided into two categories, and accordingly, the services provided by the bank differ. One category is private collectors and professionals. P13