How Private Clients Structure International Banking Relationships
Principles rather than prescriptions.
Private clients arriving at international banking usually ask the wrong question first. The question is normally about jurisdiction, or about which institution, or about what is permitted. The prior question, and the one that determines the answer to all three, is what the structure is supposed to do.
Three purposes account for most private international banking. They are distinct, and conflating them is the origin of most badly built structures.
- Operational capability. The client transacts internationally: property, education, medical treatment, business interests, family obligations in more than one country. The requirement is multi-currency capability and reliable settlement. This is a payments problem.
- Diversification. The client wishes to hold capability in more than one legal and banking environment, so that disruption in any one of them is inconvenient rather than paralysing. This is a resilience problem.
- Structure. The client’s affairs involve trusts, holding companies, foundations or investment vehicles that require banking in their own right, separate from personal accounts. This is a governance problem.
A structure built for one of these will serve the others badly. Most clients need elements of all three, in different proportions, and the proportions change over time.
Separation
The organising principle is separation by function.
Personal operating liquidity sits apart from investment capital. Investment capital sits apart from custody of the securities and metals it has purchased. Corporate and fiduciary structures bank separately from personal accounts, so that the legal ring-fencing the client paid for is reflected in the banking arrangement rather than contradicted by it.
Separation costs a little in administrative effort. It returns clarity, which is worth more, and defensibility, which is occasionally worth everything. A structure whose logic can be explained in five minutes to an auditor, a regulator or an adult child is a structure that will survive the moment it is examined.
Diversification, correctly understood
Holding four relationships within the same jurisdiction, clearing through the same correspondents, subject to the same regulator, is not diversification. It is one exposure with four sets of statements.
Genuine diversification requires independence of failure modes. Different legal systems. Different settlement environments. Different regulatory perimeters. Two relationships that are genuinely independent achieve more than six that are not.
International arrangements should generally complement domestic banking rather than replace it. Established domestic relationships carry credit history, local payment access and regulatory familiarity that took years to acquire and cannot be reproduced abroad. Dismantling them in favour of a single international relationship reduces resilience while appearing to increase it.
Governance
The structure must work when the client is not available to explain it.
That means documentation: what each relationship is for, who is authorised, what happens on incapacity, what happens on death. It means signatory arrangements designed for the family as it will be rather than as it is. It means that the structure’s logic exists somewhere other than in one person’s memory.
Most private banking structures fail this test. The failure is invisible until a transition, at which point it is expensive and public.
What we do not publish
This page sets out principles. It does not recommend jurisdictions, structures or institutions, because those recommendations depend on residence, citizenship, tax position, family circumstances, commercial activity and regulatory obligations that vary entirely between clients.
Advice specific to a client’s circumstances is given in a confidential consultation, subject to our compliance and suitability review, and in coordination with the client’s tax and legal advisers.