A Research On The Development Of Private Banking In China's Business Banks

Though private banking has a history of more than one hundred years abroad, it is a brand-new thing to China. Due to China's highly-developing economy and constant increase in residency private wealth, more and more rich people need wealth management service, which accounts for the huge growth potential of private banking. On March 28, 2007, Bank of China opened the first banking department of private bank in China, which started a new chapter with banking of China. At present, foreign capitals banks adopt an optimistic attitude towards the personal financial market of China, regarding private banking as the key business, focusing on the high net value customers of China, which makes private banking the focus of the competition between banks of China and foreign countries.This thesis has six chapter. Chapter one is introduction. Chapter two is drawn lessons from theoretical foundation and theory, which gives the overview of the private banking. The first part includes the definition of banking business, the customer's type, and service that mainly offers by private banking. The second part introduced the theories of previous scholars, mainly analysed the innovative theory of finance, rebuilding banking theory and theory of financial intermediation. Chapter three is the development and enlightenment of foreign private banking. The content of this chapter started with the analysis of background of foreign private banking, then introduced the current situation of foreign private banking, attaching great importance to the private banking of Switzerland and U.S.A., thus obtained a new development trend of the foreign private banking business as well as reference and enlightenment to china. Chapter four is current situation and questions of development of domestic private banking. This chapter analyzed the current development the market of private banking and competition state at home, and pointed out the the difficulty that needs overcoming in the course of opening private banking by domestic commercial bank. Chapter five provided a SWOT model analysis to China Merchants Bank forming private banking business, then drew a SWOT conclusion by a in-depth analysis of internal capacity and external environment. Chapter six gave some suggestions to domestic commercial banks in developing private banking.And the conclusion is as follows: (1)Currently, the industry has yet to form a unified private banking business definition, which generally defined as a financial sector which provide personalized, high-quality and all-round of financial services depend on personal status of high net worth individuals and their families. (2)The difference between the private banking business and the retail business of bank was summed up, which mainly listed as clients, confidentiality and security requirements, the content of services, the request of employees, and private banking business has the characteristics of less risk, higher profits. (3)Private banking customers require service quite different from that of general customers. One of the most prominent characteristics of private banking is its privacy. (4)Switzerland, the birthplace of private banking, still has a lot of advantages in developing private banking. If the future private banking customers values more on the investment achievement, the private banking (especially the banking department of private bank of the investment bank) of U.S.A. may has more advantages. (5)Private banking business contains variety of services. It provides not only financial services as commercial banking business, investment banking business, insurance business, advisory services, fiducial business ,etc.but also non-financial services which associated with life according to clients' requirments. (6)To service the clients better, the private banking should provide the best comprehensive products and services, especially the further innovation of the service circuit and organizational structure. (7) General speaking, private banking business is low-risk business, for instans, its credit Risk, market risk, liquidity Risk. The main risk lies in its operation and reputation.(8)In this financial globalization era, decentralization, globalization and mixing characterize the development of financial intermediation. This trend makes financial institutions work out private banking business,which provide clients with globalization, diversity and personalized service. (9)This paper gave a preliminary study of China's private banking market.Although the high net worth individual customer base has been formed,the private banking business can not be really done in China's financial environment. Domestic institutions are unable to provide related services. Besides, the key factor of private bankingbusiness——customer contact manager is scarce. Foreign financial institutions have significantadvantages in the wealth management business, but we still should strive for this market. Financial institutions should first fix "Basic Skills", which start from the retail banking business to personalfinancial services, and finally reach the top of the pyramid——private banking business. We have tolearn the advanced technology of foreign banks before market Completely open. (10)Developing the private banking in China needs to overcome the problems like lacking sincerity in the whole society, capital market's not riping yet. Meanwhile, since the private banking industry pays great attention to the private secret principle of the business, data materials in the field of this business are seodomly disclosed.As private banking business in China has not carried out,there are inadequate understanding of this business. In this paper gave the systematic introduction and the initial theoretical discussion of the modern Western private banking industry, as well as a preliminary study on the possibility of China carried out private banking business. It somewhat helps people understand more comprehensively and go deep of private banking business. The weak point here lies in: (1) The theory did not be analyzed deeply enough. Though this text has used relevant theories to analyze and explain some to the private banking, the theoretical research is not deep enough; (2) This study lack the support of a large number of statistics. The reason for that is the particularity of the private banking.