Explore The Private Banking Business With Chinese Characteristics, The Path Of Development

As economy and society develop, it is no doubt that the rich boom in mainland China. The Pareto principle (also known as the 80-20 rule), which states that 80% of the wealth is owned by 20% of the population, results in more and more banks providing private banking services to their customs.In accordance with the general international practice, the profits from private banking services are 10 times as many as those from the ordinary clients. Particularly, the average margins of private banking business of U.S.A. surpass 35% and its annual growth rate is between 12% and 15%.The population of millionaires increases annually at the rate of 7% or more. With the fast and healthy development of economy in China, the national income and personal wealth increase with high speed. Moreover, the group of high-net-worth individuals is inclined to extend and spread in the mainland.As 2008 World Wealth Report compiled by Merrill Lynch and CapGermini indicates, China has been the country with its most ultra-high-net-worth individuals (ultra-HNWIs) in the Asia Pacific area and the number of ultra-HNWIs, those who reside in household with a net worth or wealth of＄30 million or more, is 6038.The average wealth of the rich in mainland China has been 5 million dollars. Although the number is in the second place in the Asia Pacific area, only next to Hong Kong, the country absolutely has the most quantities in the world. Also Hurun Report 2010 points out that the number of the rich who owns wealth of＄10 million has come to 875000 by the end of 2009. Compared with the number which was 825 thousand last year, it has increased by 6.1%. Furthermore, the number of billionaires has reached 55 thousand,4 thousand more than 2008. On the ranking list, Beijing, Guangdong and Shanghai are the top three districts in which there are the greatest populations of the rich who owns wealth of＄10 million. The total number of the rich in the three regions is 418 thousand. It is 47.7% of the total population nationwide. Next to them are Zhejiang, Jiangsu, Fujian, Shandong and Liaoning which ranked from forth to eighth.Under such circumstance, private banking business not only helps commercial banks promote their international competitiveness and achieve strategic shifts, but is essential to maintain financial order and sustained economy development of our country as well.At present, it is considered that private banking is only an ornament in mainland China. However, it is unrealistic to compare domestic private banking at its initial development to the century-old western business in view of the different reality of economy, finance, culture and social system in our country.This article aims to demonstrate the importance and practical meaning of private banking in Chinese banking business and explore ways of its development with Chinese characteristics by looking back on its origin and history and drawing on experience of overseas private banking management, given current situations and features of every layer in society of our country. Only in this way, can we face the opportunities and challenges of Chinese private banking business in the post recession times positively.The main ideas of this article are:Chapter 1 introduces the origin of private banking business in China and its difference from other financial management services with relevant theories and principles. Chapter 2 explores the private banking business in three countries with different degrees of development and compares three private banks home and abroad in the form of cases.Chapter 3 analyzes features of every layer in current society of our country, such as the layer of law and macro economy.Chapter 4 points out some problems in the development of private banking business at present and provides some suggestions for promoting the business and its strategic shift.The last chapter indicates the feasibility and necessity of the developing private banking business in China.We believe that we can only develop private banking business well on the grounds that we fully understand out market, culture and clients'characters, needs and interests and we have high-qualified private banking customer service advisors.With the fast development of economy, private banking business will be more and more vigorous and we could expect its bright future.The main contribution of this article is a comprehensive summary of the private Banks'theories and cases. However, the article is limited in some ways. Due to the author's professional knowledge and personal research ability, statements are generally theoretical discussions and the article lacks more persuasive model formulation and empirical study. Hopefully, these shortcomings would open doors to the future research and exploration.