Banks can either be incorporated or not incorporated. This means that they are either considered to be a legal entity in their own right or they are not. A private bank is not incorporated and is therefore not considered to be a legal entity in its own right. This means that the assets of the individual or general partners in ownership of the bank could be looked to by the creditors to pay off what is owed to them if the situation so arises.
Private banks in the sense described here should not be confused with the distinction that some people may make between the independent high street banks and the nationalised, government run, financial institutions. In these cases some people sometimes refer to the independent banks as Private Banks because they are in the private sector as opposed to those run by the government which are in the public sector. Nor should private bank in the sense explored in this article, be confused with the type of rather secretive, and some people would say suspicious, arm of a bank that will restrict the access to its services to those people and companies who are of high net worth.
Private banks, in the relevant sense discussed here, are those owned by an individual or a number of general partners perhaps with a number of other limited partners. They are on record as having existed as early as 1685 in Switzerland. In present day Switzerland Hottinger and Cie, part of the Hottinger Group, still exists as a private bank, having been founded in 1786. It has offices in over a dozen cities worldwide including London, Paris, and New York. But in remaining as a private bank Hottinger is very much an exception rather than the rule. Most banks that started out as private banks have now become incorporated and so are no longer correctly called by this name.
One of the few remaining private banks in the USA is that of Brown Brothers Harriman & Co. This was created in 1931, and it now has around 40 members in general partnership, with assets of around $3.7 billion, and employs over 3000 people in fifteen cities worldwide from Dublin to Tokyo to Grand Cayman. In the UK the Duncan Lawrie Bank provides another example of a private bank. This prestigious Belgravia based bank was created in 1860 and now caters largely for the British upper class. It has its own estate in Kent and also an offshore arm that is based in the Isle of Man.