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Private banking is a term which covers both all of the services which banks give to individuals usually with liquid wealth of above 1 million dollars, and also the division of that entity
which does checking, savings, and loans for that clientle.
The word "private" in private banking is mostly a reference to minimizing taxes via careful allocation of assets. Offshore bank accounts can be used for this purpose. Also it alludes to private
equity, which is essentially share ownership of a company not availble for the general public to buy in a stock market. Private
banking clients are usually given special opportunities to invest in these, along with special IPO opportunities. Originally however the use of the word "private", as in "private client" comes from the fact that
originally these type of services were sold by major instutional and investment bank, who usually did not work with private
individuals (instead normally working with public coorperations).
Private banking usually combines trust services, investment services, banking services, and tax services.
The largest private bank is Union Bank of
Switzerland.
The most profitable private bank is the private banking division of Merrill Lynch.
As of 2000, the amount on deposit with private banks in the world was about US$13
trillion. To put that in perpective, the amount of assets that the largest United States bank has was about $1.3 trillion, and
the total amount of printed cash in the United States at the time was $6 trillion.
Switzerland is the major location of private banking. As of this writing, it has about 2 trillion in assets under management, which is about
one third of all offshore money.
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