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From the History of Private Banking

The history of private banking started as early as 2000 BC and flourished in Babylon. The first record of a private banking system was the IGIBI Bank of Babylon, later monopolized by the temples. Two centuries later, in Greece, private bankers and government specialized in money lending, changing of coin, letters of credit, and paying interest on deposits.

In ancient Rome, banking was entirely a private enterprise carefully regulated by law until Augustus Q.V. monopolized the banking business of the empire. After the fall of the Roman Empire, money was again conducted by private moneyed individuals, who organized institutions known as “poverty banks”, which lasted until the 8th century. From the 8th to the 13th century, banking was again monopolized, this time by the churches.

With the growth of trade in the Middle Ages, banking became a private enterprise trade (today referred to as international banking), to escape the various religious prohibitions and to facilitate foreign trade. Foreign trade required a bank in all transactions, and in the early years, it was considered best for the family to own both the local and foreign banks, by establishing a son, a relative or at least a partner in the remote enterprise.

Geneva has several banks dating back one hundred and fifty years: Ferrir Lullin formed in 1795; Lombard Oldier and Cie formed in 1798.

Private bankers in Switzerland past and present are not incorporated companies; they are organized partnerships of moneyed individuals. Their risk is not limited to the bank capital or reserves. They are responsible to the full extent of their personal resources. Private bankers are discreetly hidden away. They spurn the overt display of massive glass and chrome buildings. Most of the banking business is conducted on a personal basis.

Private banks still exist today, although there may be various requirements in their formation in each country.  The only real difference is the government intervention in a particular jurisdiction. Due to the desire for privacy, confidentiality, and a better return on investments and tax benefits, private banking has flourished in the past decade.

 

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