The Exploration On The Private Banking Business Of The City Commercial Banks

Since more than30years’ economic reform, there are tremendous changes have been taken places in China with lots of outstanding achievements. The established, gradually matured capital market can be described as one of the most important achievements in Chinese economy development history. China’s fast-growing wealth market and the rise of a large number of high net worth individuals(HNWI) have attracted many world banks’interest and strategic investment in this filed. In Sep05, one of the world’s leading private banking UBS obtained the1st approval from CBRC and set up Representative Office both in Beijing and in Shanghai opening the prelude to development of Chinese private banking.In domestic capital market, along with the reform of interest rate, interest spread (both deposit and loan), as a main traditional source of income for commercial banking, has been narrowed gradually. With an aim for strategic transition and profit exploration, Big4and many large joint-stock banks have been turning their attention to this fast-growing market, i.e., private banking, with a large amount of transactional fees charged which are more fruitful than the interest margin under current situation. As a special group in China’s banking industry, city commercial banks were formed by several local urban credit cooperatives. They are now losing the policy advantage from the local government and facing the challenge from the change of the capital market and their competitors. New business model has to be adapted to overcoming the hard time. At this strategic turning point, shift into the private banking industry might be a way out.In this essay, firstly the definition, history of private banking and its difference with traditional personal banking will be elaborated, with a focus on the current development and underlying obstacles of domestic private banking. Then, based on existing business model of city commercial banking, the opportunities as well as challenges incurred by private banking business will be deeply analyzed. Finally, taking3banks’private banking business model as examples, plus related SWOT analysis, suggestions of private banking development of city commercial banks will be raised.