VIP-zone / Private banking
The appearance of the legal millionaires will inevitably result in the increase of demand for the exclusive bank service.
The few Russian banks, that advertised Private Banking, had to invest enormous amounts of money into that.
The Private Banking brand envisages the complex of financial and attendant services, which the banks grant only to their most privileged customers. Although the last phrase is more often to hear in Ukraine, our bankers are of an opinion, that the native banks are only making the initial steps in this direction. «There is no Private Banking in Ukraine so far. In fact, the classical bank services are granted, but the service of quality is significantly higher», says Aleksej Aleksandrov, Head of the Personal banking service of JSIB «UkrSibbank». At the same time, according to the investigation data by Credit Suisse, the development potential of Private Banking in Ukraine is estimated as high as $14,9 bln. annually. This suggests, that within the next few years the exclusive bank service, as it is also called, will secure its adequate position among other services of the native banks.
According to Mr. Aleksandrov, the principal factors, which restrain the development of Private Banking in Ukraine today are the comparatively high political risks, as well as absence of bank secrecy principle. Despite this, the Ukrainian bankers believe, that the banks will offer the real complex of Private Banking services to their most privileged customers in the next few years. Such factors as growth of the population revenues, increase of the legal and financial literacy of the well-off customers, advent of the new bank technologies will favor this, as well the approach of the foreign banks on the Ukrainian market, and appearance of the customers, who require the top quality service and are interested in rather complex bank products.
Firstly, Private Banking envisages the individual service for each VIP-customer. Proceeding from the experience of the Russian banks, where the development of this segment is far ahead of the Ukrainian market, the Privatå Banking services are used by the customers with the deposits of not less than $100000. Hence, the bank earns enough money from such a customer to grant him a personal manager. Secondly, the VIP-customers are usually interested in more complex bank products than the usual retail customers. In this connection, special financial services are offered within the framework of Private Banking, for instance the so-called structured bank products. Thirdly, to attract the VIP-customers, the banks offer a number of additional services within the framework of Private Banking, which are not directly connected with the bank’s activity. It is about the vast choice of discounts in various institutions, access to the VIP-rooms of the airports, various consultations on different issues, etc. They say in Switzerland (half jokingly, half seriously), that the banker can even walk the dog of his customer, if only this is going to help their partnership.
The development of Private Banking in Ukraine is restrained by the political risks and absence of the bank secrecy principle.
As Valerij Tutyhin, Presidium Chairman of the Barrisrter’s Board of the Russian legal company John Tiner & Partners says, the experience of Private Banking implementation in Russia confirms the fact, that at least two factors are necessary for the development of this complex service, namely: high confidence level to the banking sphere and the presence of the legal millionaires in the country. It is quite logical to suppose, that in Ukraine, as well as in the whole world, the complex of VIP-services will only available to those people, who are able to confirm the legality of those $100000-200000, which they earned. On the other hand, the potential VIP-customer can deposit such an amount only having quite a high confidence level to the bank’s system. Additionally, it is worth noticing that even the people, who possess quite a sustainable fortune (hundreds of million dollars) do not keep more than $1 mln. in one bank, which is conformed by the Russian experience, as Mr. Tutyhin put it.
Thus, the conditions for Private Banking introduction are currently there in Ukraine today. First, the population’s confidence to the bank sector is on the increase. Let us remind, that the bankers, interviewed by «SEJCHAS» magazine consider the almost 76% increase of the bank deposits of individuals in 2005 against the 28,5% increase in 2004, to be the sign of the growing population’s confidence to the banks. Besides, according to the data of the State tax administration, the number of legal millionaires in Ukraine grows year in, year out, and already in 2004 about 850 of Ukrainians declared the income, which exceeded UAH 1 mln.
Today some Ukrainian banks have already made the first steps to provide the Private Banking services and even opened the specialized departments, which work in this direction. The introduction of Visa Infinite cards by some of our major banks in the middle of the last year may be considered one of the first signs of the new VIP-class services complex. These cards have the top position among the other cards of Visa International payment system. The cards, which correspond to Visa Infinite are available in other payment systems, and usually they are the attributes of the Private Banking customer. For instance, such a card in itself offers to its holder many discounts in various shops, restaurants, car rentals, yacht rentals, etc, as well as accident insurance with a considerable covering limit.
The Russian Private Banking experts mention the importance of such services within the framework of the VIP-customers service, but they advise the bank’s, which want to work in this direction, not to overdo the job. The thing is that too persistent advertisement of such cards, as well as of any attendant services, discounts, etc, may scare the well-off customers, who, acting from the contrary, are guided with the principle of “I can buy it myself”. In other words, Private Banking anticipates primarily the bank services, and only after that any attendant services. Generally, speaking about the advertisement of Private Banking, the Russian experts advise to accurately estimate all the pros and cons of such a campaign. The Russian experience shows, that those few banks, which advertised Private Banking, had to invest enormous amounts into that. On the other hand, the overwhelming majority of the Russian banks’ VIP-customers came to the Private Banking not because the advertisement, - for the most part they were either the old customers, which officially gained the VIP status, or those, who came to the bank on the recommendation of the other VIP-customers. And the very nature of the Private Banking services complex does not envisage the mass character of them, because all those services are exclusive in themselves.