Private Banking in Hong Kong: Minimum Requirements & More
Do You Need Private Banking And How to Start?
Virtually everyone loves to have someone at their beck and call. This can be essentially helpful when it comes to banking or financial services, as you can easily beat bureaucracy - no queues, filling tellers, and more. Private banking is a type of banking that handles your entire financial needs through a dedicated representative.
In other words, private banking doesn't just cater to your professional account management but also the need for financial establishment. Do you need private banking? You'll decide by the end of this article and see how to go about it.
What is Private Banking?
Private banking refers to the special financial services retail banks and other financial institutions offer to their high-net-worth or wealthy clients. Some banks are solely dedicated to providing these exclusive banking services, and they are known as private banks.
Top Private Banks in Hong Kong
- Bank of China (Hong Kong) Private Banking
- Bank of Singapore
- BNP Paribas Wealth Management
- Bank of East Asia
- China CITIC Bank
- Citi Private Bank
- China Construction Bank (Asia)
- Credit Suisse
- DBS Private Bank
- Deutsche Bank Wealth Management
- Goldman Sachs Private Wealth Management
- HSBC Private Bank
- Julius Baer
- J.P. Morgan Chase & Co.
- LGT Asia
- Morgan Stanley Private Wealth Management
- RBC Investment Management (Asia)
- Standard Chartered Private Bank
- UBS
Private Banking Services
Private banking services include common financial services such as checking and savings accounts. But, in addition, it includes specialized services such as:
- The investment strategy and financial planning advice
- Portfolio management
- Customized financing options
- Retirement planning
- Passing wealth on to future generations.
Private banking takes a personalized approach which simply means that the bank pays careful attention to the individuals while rendering services. To this effect, each of these customers is assigned a "private banker" or a "relationship manager" to handle every banking needs they may have. This ranges from regular bill payment and arranging a jumbo mortgage to specialized services.
Advantages of Private Banking
Advantages of private banking include:
#1. Privacy
One of the foremost benefits of private banking is that it offers you privacy. Your financial dealings are not available to others, which essentially wades off competitors.
#2. Preferential Pricing
The privileges of preferential pricing and discounts on private banking products and services make it attractive. You can have special terms or interest rates on loans and mortgages. Savings accounts may also be zero-fee, free of overdraft charges, and attract higher interest rates.
#3. Personal Attention with a Dedicated Representative
Another significant advantage of private banking is having financial services tailored to your needs through a private banker. These people are professionals assigned specially to you to handle all your banking needs. This can facilitate smooth and efficient service and, in the long run, a real white glove relationship that may involve concierge services.
#4. Alternative Investments
Private banking offers investment advice and product coverage for both public and private markets . If you wish to explore the trending alternative investments , you can enjoy some level of access to the exclusive private markets and expand your investment portfolio. This service is not usually available to retail investors.
#5. Assets and Fees for Banks
Banks and other financial institutions offering private banking also benefit from it. Today, fee income ranks as one of the major streams of revenue for Banks, and with private banking, banks can amass substantial amounts through fees.
Even at discounted rates, fees from managing high-net-worth individuals'(HNWIs) portfolios and interest on loans can be significant. Funds from HNWIs can also contribute largely to their overall assets under management (AUM).
#6. Ability to Connect with a Network of Specialists
Banking with a private bank exposes you to specialists as your private banker can give you access to their team. Connecting with finance professionals such as tax attorneys, estate managers, and investment experts can be a big plus; they can be handy for a rainy day.
#7. Business Benefits
As a business owner, having your business account with the same bank where you run your private banking can be a huge advantage. That way, it might be easier to get a loan to finance projects and expand your business. You might also be entitled to little perks like discounts and fair interest rates.
Disadvantages of Private Banking
Private banking also has its disadvantages which include:
#1. Limited Product Offerings
As a private bank client, you will have to stick with whatever products the bank offers. And sometimes, private banks are slow to respond to new available deals in the financial market.
They might not offer highly professional investment services when it comes to investments since that's not their primary focus.
#2. Upfront Deposit Before Making any Allocation
Because private banks cater to the financial needs of ultra-high-net-worth individuals, the minimum deposit amount is usually high. But the main challenge is that customers have to fulfill an upfront deposit of the minimum amount before there can be any allocation.
#3. Private Bankers Come and Go
Private banking can be tricky sometimes. If your relationship manager leaves the bank, it can leave you at the crossroad "stick to your bank or your relationship manager?"
How to Open a Private Banking Account?
Just like a regular bank account, opening a private bank account follows a procedure. But then, you need to be sure you're eligible for private banking.
According to the private banking listings posted on the South China Morning Post , most of the private banks in Hong Kong require investable assets from US$2 million per client. For instance, Bank of China (Hong Kong) Private Banking has a $US2 million minimum asset requirement per client.
You'll also need some documents, which may include:
- Your official ID, such as a passport or an HK ID card;
- Proof of address, such as a utility bill, a bank statement, or a mobile phone bill (less than three months old). If you don't have a Hong Kong address, you can provide proof of your address in your home country.
- A valid visa.
Note that the minimum requirement implies that you can't have less than the manipulated amount in your account. So, you may have to fund your account with more than just the minimum amount.
Minimum Requirement of Private Banks in HK
- Bank of China (Hong Kong) Private Banking, the minimum investable assets required is $US5 million
- Bank of Singapore, the minimum investable assets required is $US5 million
- BNP Paribas Wealth Management, the minimum investable assets required is $US3 million
- Bank of East Asia, the minimum investable assets required is $US2 million
- China CITIC Bank, the minimum investable assets required is $US2 million
- Citi Private Bank, the minimum investable assets required is $US5 million
- China Construction Bank (Asia), the minimum investable assets required is $HK15 million
- Credit Suisse, the minimum investable assets required is $US5 million
- DBS Private Bank, the minimum investable assets required is $HK25 million
- Deutsche Bank Wealth Management, the minimum investable assets required is $US5 million
- Goldman Sachs Private Wealth Management, the minimum investable assets required is $US10 million
- HSBC Private Bank, the minimum investable assets required is $US5 million
- Julius Baer, the minimum investable assets required is $US3 million
- J.P. Morgan Chase & Co., the minimum investable assets required is $US10 million
- LGT Asia, the minimum investable assets required is $US2 million
- Morgan Stanley Private Wealth Management, the minimum investable assets required is $US2 million
- RBC Investment Management (Asia), the minimum investable assets required is $US2 million
- Standard Chartered Private Bank, the minimum investable assets required is $US2 million
- UBS, the minimum investable assets required is $US5 million
Alternative Investment Platform Compared to Private Banks
Private banking provides a personalised one-stop banking services to meet their clients’ financial needs, and they offer investment products in both public and private markets, investors may gain access to some alternative investment products. While many HNWIs are boosting their exposure to alternative investments , private banking may not be able to keep up to their expectation as alternatives are not the main focus of private banks. It is recommended to consider going to a specialised alternative investment manager for a diverse and up-to-date alternative investment solution.
Say for example, Altive is an alternative investment platform that specialises in private markets investment solutions, it provides professional investors access to premium investment opportunities that were previously only available to institutional investors. These opportunities usually come with a large ticket size from US$10 million to over US$100 million that even private banks may not have access. With the technology empowerment, Altive is able to provide top-tier private markets investment opportunities, such as Pre-IPO deals, private equity (PE), private credits , with a small ticket size from US$100k to professional investors.
Conclusion
Private banking is a solution to a holistic financial service, where you can have all your financial needs met in one place. However, investment platforms that specialised in alternative investments may be where you shoul d go for if you are looking for the exclusive and latest alternative investment opportunities.
Join Altive now* and gain access to institutional grade investment opportunities from US$100K.
*The opportunities on Altive’s platform are only for Professional Investors as defined in the Securities and Futures Ordinance of Hong Kong .