We are all familiar with the many jobs and roles of ‘traditional’ high street banks. We use them for a huge number of purposes ranging in size and speciality. For example, mortgages and business loans are all well-established services that people have sought the help of banks for, throughout the years.
There are also some banks that cover specific financial offerings and practices such as Islamic Banks, adhering to the financial rules of Islam and the Sharia (source: Redstone Private Banking) and National Banks that help citizens of their country with specific tax and fiscal policies and practices that are more relevant to some.
In the UK, Private Banks were established in the 17th Century, originally to manage assets belonging to the Royal Family, gentry and nobility. It was a very exclusive service that few could aspire to utilise, let alone actually make use of. In recent years though, more people are using these institutions than ever before and this is the case around the world, with the USA having a huge Private Banking industry.
However, there is also a range of Private Banks that offer a whole host of services; some of which are not dissimilar to services offered by a high street bank. So, what is the difference between a so-called ‘traditional’ bank and a ‘private’ bank?
Using a Private Bank
Private Banks don’t exclude anyone as such. However, they will tend to focus their services and offerings on those that are deemed to be ‘High Net Worth Individuals’ (HNWIs). These are people with a high net worth and a lot of ‘money in the bank.’ For example, it isn’t uncommon for a private bank to only allow people to become a member and account holder if they have over £10 million in the bank. This will typically be in addition to their assets such as investments, businesses and properties.
In addition, some of the services provided by these banks will be tailored to the needs of people such as HNWIs. They will usually be able to provide things like International Mortgages and wealth management. For example, a private bank will be able to provide specialist wealth advisers and wealth managers that can help a HNWI choose the best investments and ways to increase and enrich their portfolios and wealth as a whole.
Private Banks in the last few decades though have also increased what they can do and offer by expanding to all corners of the world. With an increased degree of ‘globalisation’ and desire to move beyond borders, there has never been a greater demand for the services of Private Banks.
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