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date: 15 October 2019

Abstract and Keywords

Private banks have been defined as banks whose owners are also their managers and whose legal form is that of a partnership. This chapter emphasizes their continued relevance from the eighteenth to the twentieth centuries, even though they became increasingly marginalized from the 1870s. Throughout their history, private banks have had two main characteristics: a high degree of specialization, whether in a type of business (trade finance or corporate finance) or a type of customers (foreign governments, or high net worth individuals); and a reliance on networks (family networks, often combined with religious networks, especially Protestant and Jewish). The most successful private bankers (the City of London’s merchant banks and Wall Street’s investment banks) eventually turned into public companies in the 1960s, ringing the knell of private banks. Private banking re-emerged in the 1980s, no longer as a form of organization but as a banking activity: private portfolio management.

Keywords: private banks, partnership, merchant banks, investment banks, specialization, networks, private portfolio management

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