DATABASE: PRIVATE BANKING ANALYTICAL OVERVIEW


Private Banking
Origin Geneva banking partnerships, with partner private (meaning personally unlimited) liability, offering traditionally conservative services to the old wealth of Europe and the French Revolution, social unrest, popular democracy, redistributive taxation etc all providing helpful support to demand growth ever since

Definition Private Banking, in the Geneva tradition, means the preservation of family assets by their protection from: 1. taxation and other government intervention, 2. market and political risk and 3. forced rules of succession (legitime Fr iryubun Jp) and family breakdown and is highly conservative in its service philosophy

Expansion There has been a post-War 1. wider market + 2. higher profit margin trend: 1. client towards developing world funk money, overseas Chinese entrepreneurial assets and even expatriate employee savings and 2. provider towards larger financial institutions aggressively offering in-house structured 'high risk/high return' retail product

Categories The term 'Private Banking' has consequently been markedly devalued and now generally means the privateness of the client and not of the provider, and is on-shore or off-shore and personalised or retail in the four permutations according to the tax location of the master account and quality and depth of service offered

Swiss vs US (i) Simple labels for the two extremes of the service spectrum permutations: off-shore personalised in the Geneva tradition of conservatism, risk avoidance and asset preservation versus on-shore retail in the New York tradition of high risk/high return through aggressive exposure to in-house structured products

Swiss vs US (ii) Swiss equates to extreme confidentiality and effective tax avoidance and US to asset growth and tax efficiency, while global regulatory developments favour the US on-shore retail services that are so highly profitable and these are becoming the one-size-fits-all product offered by larger financial institutions worldwide: 'McPrivate Banking'

Japan (i) Rapid economic growth in late Meiji and early Taisho led to pools of enormous private wealth that were managed on an on-shore personalised basis notably using then-trust company vehicles, but this native tradition was wrecked in early/mid-Showa by war, confiscatory taxation and eliminated by adverse tax + financial policy

Allfinanz The Heisei Reform 'Allfinanz' is restructuring the financial economy towards a Taisho-style disintermediation, universalisation and a public/private sector level playing field with on-shore mass market low-end retail private banking services made available to reweight household financial assets towards a higher risk/return profile

Japan (ii) 'Allfinanz' is closely integrated with the other three Heisei Reform programmes of re-inventing Japan ('FILP', 'Local Government', 'Tax'), has important tax revenue implications, foresees foreign players as 'international specialists' and thus makes foreign offered Private Banking services a peculiarly problematic and sensitive area

Source: Analytica Japan
Note: Meiji 1868 - 1912
Taisho 1912 - 1926
Showa 1926 - 1989
Heisei 1989 -



Copyright 2006 by Analytica Japan - All Rights Reserved