For the extremely wealthy, the decision on where to deposit one’s funds is an important one. Recent history has shown us that no bank is ‘too big to fail’, and the perceived safety of funds on deposit has certainly changed as a result.
While most banks are now protected by the FSCS Deposit Protection Scheme, a government guarantee that up to £85,000 deposited with any banking firm will be returned to the depositor in the event of the bank’s failure, for the ultra-wealthy this is likely to be of little comfort.
The decision about where to deposit substantial funds becomes, therefore, increasingly important with the scale of those funds. London is the proud home of some of the world’s oldest private banks, a few of which remain in private hands, and the balance of which have been bought up by larger banking groups.
While all of these banks offer the ‘traditional’ services of making deposits and borrowing funds, several of them are also able to offer tailored solutions to more complex and exotic requirements.
Absolutely central to what each of the private banks offers is their level of personalised service. With all of the main private banks in London, each account holder has a dedicated account manager (or ‘relationship manager’ as many are known), who knows the account holder, has an appreciation of their assets, liabilities and desires, and is able to be on hand as much or as little as that client might wish to assist with their everyday banking needs.
There are, in our experience, no automated telephone lines at private banks. Clients of the bank usually have a direct-dial number for their relationship manager and, in the event that the relationship manager is in a meeting or on holiday, the relationship managers work in small teams to ensure that the clients can, nevertheless, be well cared-for.
While the majority of the London private banks charge a monthly fee for a current account, most will waive that fee if a certain level of deposits is maintained with them.
Almost all of the high-street banks now offer bundled bank account services, with perks such as travel insurance, mobile phone cover, airport lounge access and reward points or cashback on expenditure. Some, in addition, offer dedicated areas within branches and even offer telephone concierge services on top.
Those accounts, like private bank accounts, generally incur a monthly or annual fee, some of which are waived if certain minimum balances are maintained. The principal difference between those accounts and accounts held at a private bank is the way in which the banking relationship is handled. While many of the high-street premium accounts will offer a named account manager or team, the reality is that this manager or team acts very much as a front-of-house face to field your question, concern or request, which is then passed to someone else to deal with.
Similarly, while by no means the norm, many of these larger high-street banks struggle to retain staff on an ongoing basis. Conversely, we know of private bankers who have been with their banks in London for over forty years; indeed, in one of them a partner at the bank will personally meet (and vet) every incoming client before they are able to open an account.
In this way, with a ‘true’ private bank account, your private banker will be on hand to treat your request promptly and in person – while specialists may be brought in to assist with particularly complex or unusual transactions, the vast majority will be performed by your relationship manager themselves.
London’s private banks have long enjoyed a monopoly over the world’s wealthiest families. While each bank has its own particular character or personality, all of them without exception are well-versed in the types of transactions which very wealthy clients tend to require.
From short-term bridging facilities to lending in support of substantial prime property transactions, none of the private banks in London, we suspect, would claim to offer the best interest rates available. What they are able to offer, conversely, is a speedy, efficient and personalised decision-making process when the question of advancing funds comes to be posed. Unlike the more populous banks, with a private bank funds can sometimes be advanced as quickly as the same day for clients the bank knows well and is comfortable in lending to.
In addition to this, a good number of the larger private banks also offer sophisticated wealth-management products, including managed funds, portfolios and discretionary investments; foreign exchange services and generational wealth-planning and tax services.
Like membership of an exclusive club, holding an account at a private bank can, it is said, also bestow a certain level of cachet on the holder. While the days of complimentary upgrades on airlines, with car rental companies and at the world’s leading hotels are almost certainly over, there are still a good number of London establishments in which their very best tables are held for clients of those banks they consider to send patrons of a certain level of sophistication and politesse. This may, of course, simply be based on the size of the tips those patrons leave.
This badge value can be of particular interest to some of the younger clients of these banks, whose entrées into the world of the ultra-wealthy have been made on the back of tech entrepreneurship, show-business or sport, and who have come to appreciate, and in some cases require, the level of service private banks provide, whilst also enjoying this token recognition of their success.
Private banks, by their very nature, tend not to advertise. While one or two of the bigger ones will sponsor carefully-selected events, usually in order to offer superior corporate hospitality to their best clients, the majority rely on well-considered introductions from existing clients.
Private banking, like many of the more amenable things in life, is not suitable for everyone. All of London’s private banks ask that clients meet minimum levels of income and assets, and some of them also require the client to maintain a minimum sum on deposit before they will even consider extending an invitation to become an account holder.
In addition to the stand-alone private banks in London, many of the British banking institutions have private banking arms, and a fair number of international banking establishments have private banking offices in London to cater to the ultra-wealthy.
There have, in relatively recent history, also been a number of new entrants to the private banking world, who offer friendly, traditional private banking services built on modern technological platforms and with 21st-century practices to support their traditional relationship banking styles.