Sustaining and augmenting wealth is the main concern of most of the wealthy. This fundamental fact leads banks and financial institutions into a game called private banking.
What is private banking?
- It is a conservative business;
- It is a business with people;
- Private banking dislikes any instability.
Why do we need private banking?
That is the same type of question as why do we need more and more psychiatrists? Because human relationships are replaced with computers. The same applies for private banking.
What is the key to the success of private banking?
Client loyalty. A satisfied client will bring new clients. A functional relationship brings stable revenues and fewer problems. Everybody in the “branch” should know that up to 8% of private clients change their bank every year compared to 2% among corporate clients.
What is the role of a private banker?
To relieve the client of the burden of caring for his own money.
Target group of private clients in the Czech Republic
- Families (private persons) that had their property that was confiscated/nationalised after 1948 restituted;
- Families (private persons) that have sold their companies or their part to foreign entities;
- Private persons that have their own prosperous companies;
- Top management of large Czech and foreign companies;
- Other wealthy private persons (athletes, artists, etc.);
- Embassies in the Czech Republic;
- Others.
The Czech Republic is a country of “new money” due to the developments after the year 1948, when almost all links to traditional ancient wealth were torn apart. For this reason, “inherited” wealth does not function here; on the contrary, there is “newly” created wealth that the client still needs to handle actively, and therefore he cannot or does not want to transfer large sums of money into traditional off-shore centres and tax paradises such as various islands in the Caribbean, or Lichtenstein or Switzerland. However, they do want the provided services to be on the same level as those in mature financial centres.
Segmentation of private clients in the Czech Republic
- Group A private clients (called HNWI – High Net Worth Individuals) – current account balance exceeding EUR 1 million;
- Group B private clients (called AI – Affluent Individuals) – current account balance exceeding CZK 5 million.
Requirements of private clients
- Global scope of their investment portfolio;
- Highly sophisticated products that not only protect their investments but also raise their value;
- Absolute guaranteed return strategies for their investments that will clearly define what kind of growth they may expect and the probability of its achievement;
- Alternative investments (such as various hedge funds, derivates, etc.)
Offer of private banking products in the Czech Republic
- gold and platinum credit and debit cards;
- executive club cards;
- framework contracts with large companies providing various services (mobile operators, information technology, travel agencies, etc.);
- possibility of investments into various European and work investment funds;
- possibility of investments into stock and bond markets at home and abroad;
- others according to individual requirements.
Banks in the Czech Republic that offer private banking
- Česká spořitelna
- Raiffeisenbank (under brand Friedrich Wilhelm Raiffeisen)
- Komerční banka
- UniCredit Bank
- Citibank
- ČSOB
- Bank Guttman
- Privatbanka
- J&T Banka
- Oberbank
- PPF Banka
The article in Czech version can be found here
Dr. Jan Vinter is renowned consultant in the field of domestic and international banking, business and politics. He worked for several international banks (Mitsubishi Bank, Citibank, ABN AMRO Bank, Erste Bank) in various managerial positions. At the political level he is closely linked to all its constitutional parts – Government, Parliament, political parties, President etc. He also lectures at the department of International Law and Relations at Charles University Law Faculty in Prague. He wrote many articles Re: economic, historical and social topics. These articles were published both in the Czech Republic and abroad. (jan.vinter@volny.cz)
