Instead, the emphasis is on a personalised service that bundles all your main financial planning problems under one umbrella.There are persuasive reasons for buying this kind of service if you have the money. They are also capable of taking calculated risks about the ultimate value of individual clients. Limits are set for them by centrally issued guidelines, based on income, employment status and credit history.Private client banks select clients on grounds of wealth, have fewer accounts, usually in credit, and lower overheads. Some, like Arbuthnot Latham, seek out “wealth creators” offering what amounts to a venture capital.
Major clearing banks operate on volume, charging consumers for low-risk credit arrangements. Branch managers have little discretion about how much they can lend to an individual. Budgie the Helicopter may have crashed, but since then Fergie has signed lucrative deals cashing in on her Royal connections, the latest as a celebrity columnist with Hello! magazine.It’s difficult to imagine your local high street branch manager granting an overdraft in the same circumstances, and this partly explains the rise of private banking. The 1980s created a new class of very highly paid professionals, and loadsamoney entrepreneurs.
These are the new rich, in banking jargon “high net worth individuals”, now targeted by private bankers. Gone is the nervous wait on a hard chair before the ordeal of having an overdraft declined over a cup of tepid tea. In its place there is “relationship management” and “understanding all elements of a client’s wealth”.An insight into this world was given when the Duchess of York’s overdraft with Coutts & Co, the Royal family’s private bankers, was revealed to be more than pounds 1m, despite her apparent lack of means to pay this off.
Iain Morse coarsely investigates the explosive growth of this exclusive sector
Old wealth is being superseded by new. In the UK, there are now estimated to be more than 81,000 millionaires, up from just over 31,000 in 1991. A good part of this money is inherited, but not necessarily in the form of country houses and estates. To talk about a boom in private client banking sounds like a contradiction in terms Booms go with busts; both sound a trifle vulgar. But although these sophisticated visitors persuaded Veerappan for the first time that he would have to stand trial, within days of their release he was back with more impossible demands: large cash compensation for all those who had suffered at the hands of the STF, an undertaking that he would not have to spend more than two years in prison. Then he vanished, as usual.The only condition for surrender that seems certain to be met, whether he surrenders or not, is the one regarding a film about his life: Bollywood already has it in hand.
