Study On Private Banking Assets Management Business

For the recent30years, with the Reform and Opening-up Policy of China, the rapid economic growth has given rise to a large number of local rich group, and the need for highly valuable assets management of these people are becoming more and more intense, therefore, private banking business attract Chinese attention gradually.Originated in western countries, the private banks have hundreds of years’ history, and they have become the service system which can keep pace with credit business of commercial bank and investment bank service. As China gradually becomes the most potential private bank market, the competition between domestic banks and foreign banks is more and more fierce. And the competition between different institutions is focus on asset management business of high net worth clients. At the same time, with the deepening of domestic financial reform and the advancement of interest rate liberalization, the banks can maintain its superior market performance only by gradually getting rid of absolute dependence on the traditional business.The development of private bank asset management business conforms to the demand of high net worth clients and the bank’s inherent requirement in finding new profit points, therefore, they have been developing rapidly in recent years. However, a series of problems appear in the process of development. Especially, the problem of risk control and regulation remain to be solved. In this paper, the author will introduce the problems and put forward related suggestions.This paper introduces private banking business from five parts:the first part is about the significance, methods and innovations of the paper; the second part is the review of private banking business, which describes the definition and features of the private banking business. After finishing analyzing private banks’history and current situation, the author put forward the necessity and urgency of the development of private banking assets management business through the development of private banking business; the third part introduces the theoretical basis and operational mechanism of private banking assets management business. The theoretical foundation is divided into the life-cycle investment theory and the customers’ portfolio theory.The life-cycle theory is based on customers’needs and objectives and the portfolio theory is about customers’asset allocation. Meanwhile the mechanism of private bank asset management business can be separated into product system and asset management process; the fourth part puts forward the main risk points in the current business through analyzing risks of private bank asset management product system and asset management process. From the aspects of product system, the risks of private banks are operational risk and reputational risk. Additional, the agent risk is the key part of the operation risk. From the process of the asset management, the risk of private banks is mainly concentrated on asset allocation and product sales. The use of the product is the main focus of private banking assets management business. Thus the risk from product sales is more remarkable; the fifth part is to put forwards the development strategies for private bank asset management from perspectives of products, risk and regulatory. As one of the developing intermediary business, private bank is of great significance to increase the bank’s profit. Therefore, as the endogenous driving force of the development of asset management business, innovation of product and function is the vital force for the growth of private banks. Nowadays, with the bewildering economy of the world, the economic situation continues downturn both at home and abroad. In order to ensure the healthy and sustainable development of private banking business, perfect risk control and strict internal and external supervision mechanism are particularly important.