Private bankers provide a number of
customized banking services, including commercial real estate loans, unsecured credit products, securities
investments, insurance premium financing
for estate planning and working capital
lines for professional firms. By establishing
relationships with their clients and developing a personalized approach, private
banking relationship managers can service
all of the financial needs for key owners as
individuals and their businesses.
“With private banking, clients have a
very special relationship with their
banker,” says Nga Nguyen, vice president
in Comerica Bank’s Western Market in
Wealth & Institutional Management.
Smart Business spoke with Nguyen
about private banking lending options,
what types of services private bankers provide and the importance of establishing
relationships.
What types of private banking lending
options are available?
Our private banking representatives
strive to provide out-of-the-box lending.
Everything is customized because clients
have special and different needs depending
where they are in their life. Let’s say that a
high-ranking executive needs to borrow
money so he can relocate. We can help him
obtain a mortgage so he can purchase a
house in the area he wants to live in. If he
has stock options, we would consider making him a loan so that he can exercise those
options at the right time. If he has equity in
his house, then we can give him a line of
credit so that he can pursue viable investment opportunities. That’s what I mean by
customized services rather than set products that people can fit in a box.
How do loans collateralized by securities
work?
If customers have a portfolio that is being
managed by a brokerage firm, instead of
liquidating their portfolio, they can bring it
to us. We have the capability to manage
their portfolio and can use the securities as
collateral so they don’t have to sell their
assets, but they can draw cash from their holdings. In today’s market, which is so
volatile, people don’t want to sell their
securities outright. This is a very bad time
to sell anything. By using securities as collateral, we can give customers a line of
credit that is very flexible and can be used
to purchase other assets or to make additional investments.
What factors do you consider when making
loans to individuals?
We don’t just look at such factors as how
much you made last year or how much you
averaged during the past three to five
years. We look at who the individual is, the
total relationship between the individual
and the company that is banking with us
and what the likelihood is that the individual can pay us back. The collateral is secondary. The individuals are the most
important factor: their integrity, their track
record and their relationship with us.
How do individuals qualify for private banking lending options?
With many banks, you must have at least
$5 million in liquidity before you qualify for private banking, while other banks
focus on the individual. Many of our
clients have put their cash back into their
companies or used it to make investments.
For example, if clients have built their
business, owned it for more than 10 years,
have a lot of equity in the business and we
have a long-term relationship with them,
then we will make sure they have a private
banking relationship and all related services, including lending.
How important is it to work with a private
banking partner that offers customized solutions?
It’s very important to the bank as well as
the individual because, in addition to lending,
banks also provide other services, such as:
- Cash/debt management
- Education funding
- Stock-option analysis
- Life and disability insurance analysis
- Investment plan review
- Retirement planning
- Estate planning
- Charitable giving
By establishing trust and a meaningful
understanding of clients’ needs, banks can
offer customized solutions. These services
are as important as how much money a
client can borrow because, without good
planning, the money you make may not be
passed on to your heirs, and you may be
paying more taxes than you should. Private
banking involves all of the services combined, not just the lending side.
What role do relationships play in private
banking?
The best referrals I have are from existing clients because they have friends who
may need the same types of services.
They want to make sure that their friends
are well taken care of. A private banker
should focus on two things: providing
solutions and maintaining trust. It is all
about relationships.
NGA NGUYEN is vice president, Wealth & Institutional Management, in Comerica Bank’s Western Market. Reach her at (619) 652-5744
or [email protected].