In the first place, private banking is used to describe banking activities, investment and other financial services provided by a bank to individuals that invest a high reasonable measure of assets. The word ‘private’ is used to differentiate this type of banking from the mass-market type of banking, in which the services are given to the general public who are willing to bank with such a bank. In the above, the services are rendered on a more personal basis, usually done through committed bank advisers. This system of banking helps wealthy families or individuals with complicated financial situations to manage their wealth, and also devise new resources for the benefit of their posterity.

Formerly in the U.S., this type of banking is considered to be exclusive for the well-to-do or individuals with high net worth with success of over $2 million. Recently, it is very popular to start a private banking with as much as $250,000 for private persons. Besides the issue of money matters, a private institution offers such services like wealth management, savings, inheritance and tax planning for their customers. The advance level of private banking is referred to as wealth management. This is often done by the opulent people of the society.

Another dimension of private banking is the secretive aspect of it, where banks collaborate with their investors to hide a great part of their wealth so as to elude the taxes that accrue from such assets. For example, Swiss banks and some other overseas banks, or the offshore banks, have been greatly criticized for such practices of cooperating with individuals to practice what is generally called tax evasion. In the Swiss for instance, tax fraud is considered a criminal offence, while tax evasion is treated as a civil offence, which does not mandate banks to attract the attention of taxing authorities to such people.

The particular service of private banking is the ability to help its clients manage their wealth today for a better tomorrow, and also for the future generations. It also helps to harness the impact of your wealth; delving into such areas like property investment, philanthropy, tax advisory and media.

In the echelon of leading private banks in the recent times includes the following in their order of high ultra net worth according to the Euromoney’s annual private bank and wealth management rankings:

Citigroup, Goldman Sachs, USB, Credit Suisse, JPMorgan, Morgan Stanley Merrill Lynch, HSBC, Pictet & Cie and Deutsche Bank.

This ranking primarily considers assets based on management, profitability, ratio of customers to relationship managers and services offered. The success achieved by these banks looking at the increase in profits and assets under management in 2006 following a slow growth by 3.8% in 2004.
 
The world’s most popular banks are located in Switzerland and Luxembourg. For the Swiss nation alone is estimated to share 35% of the world’s private banks.

On the other hand, traditional private banks run a more modest basis, unlike the modern day counterparts. This is because they are often family- run businesses, and as such, concentrate in long term banking services that have evolved over the years.