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// EXAM HALL24 QUESTIONS · 30 MINUTES

Private Banker Practice Test

Wealth arithmetic, a founder's balance sheet, and what you say when the answer is not what the client wants.

BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED

// THE SHORT ANSWER

A private banker practice test asks whether you can read a wealthy client's whole position and keep their trust when the honest answer is unwelcome. This paper has three parts: wealth arithmetic, including fees and lending against a portfolio; one founder's balance sheet set on an exhibit; and calls on discretion, conflicts and source of wealth. Every question is original, and none comes from any bank's test. Sit it against a thirty-minute clock with the reads held to the end, or take it as practice; each option then shows how far it sits from a senior banker's read.

BASIS  Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.

// HOW TO SIT IT

Answer below as practice, and each read opens as you go. Or sit it as a test: 30 minutes, with every read held back until you finish.

PART A

Wealth arithmetic

The sums behind most conversations in this seat. Work each one before you look at the options.

PART A · QUESTION 1

A client holds US$2m with you. The portfolio earned 6.0% before costs this year, and all fees came to 1.5% of the portfolio.

What did the fees cost, and what share of the return was that?

PART A · QUESTION 2

US$1m is invested for twenty years. Before fees it grows 6.0% a year; after fees, 4.5% a year.

Roughly what have the fees taken by the end?

PART A · QUESTION 3

A client's US$5m of wealth is 80% one company's listed shares, which they helped build. They do not want to sell. The shares fall 40%.

What has that done to their wealth?

PART A · QUESTION 4

A client wants to buy a US$2m apartment to rent out, borrowing all of it at 6%. The rent, after costs, is US$80,000 a year.

What does it do to their cash each year, before tax?

PART A · QUESTION 5

A client wants a home loan in a foreign currency with a far lower interest rate than the dollar loan on offer. Their income and the home are in dollars.

What do they most need to understand?

PART A · QUESTION 6

An office building earns US$1.0m a year of net operating income. Buyers price such buildings at a 5% yield, so it is valued at US$20m. The loan against it is US$12m.

If the yield buyers want rises to 6%, what is the loan-to-value?

PART B

The balance sheet

One client, nine questions. Read what is on the sheet, then what is not.

EXHIBIT E · THE BALANCE SHEET

A company founder, 58, married with two adult children, has come to your private bank. This is the sheet they brought. Figures in US$000.

All their income, about 600 a year in salary and dividends, comes from the company.

DetailsUS$000
Shares in the family company, the client's own estimate14,000
Family home3,200
Listed shares, in a portfolio1,600
Bonds, in the same portfolio800
Cash400
Loan to their son's business, no written terms500
Total assets20,500
Mortgage on the home(600)
Stated net worth19,900

Not on the sheet: a personal guarantee of the company's bank debt, US$3,000k. The request: to borrow US$1.5m against the portfolio, because “the company needs it for a few months, and its bank lines are full”.

PART B · QUESTION 7

From Exhibit E.

How much of the client's assets could be turned into cash within a week?

BACK TO EXHIBIT E ↑
PART B · QUESTION 8

In Exhibit E the company shares are 68% of the client's assets, at the client's own estimate.

What do you ask first about the US$14m?

BACK TO EXHIBIT E ↑
PART B · QUESTION 9

In Exhibit E the client asks to borrow US$1.5m against the portfolio. This paper's lending values are 50% on listed shares and 70% on bonds.

How much does the portfolio support?

BACK TO EXHIBIT E ↑
PART B · QUESTION 10

The client in Exhibit E has borrowed US$1.36m against the portfolio, at its full lending value. Listed shares then fall 30%; bonds do not move.

How much must the client find?

BACK TO EXHIBIT E ↑
PART B · QUESTION 11

The sheet in Exhibit E leaves out the US$3m personal guarantee, and the client's income all comes from the company. The client says the guarantee 'will never be called'.

Signal or noise?

BACK TO EXHIBIT E ↑
PART B · QUESTION 12

The client in Exhibit E wants the loan to put into the company 'for a few months', because its own bank lines are full.

What do you ask first?

BACK TO EXHIBIT E ↑
PART B · QUESTION 13

In Exhibit E, the company also banks with your bank's business team. You could look up its file in a minute, and it would answer your questions.

Your move?

BACK TO EXHIBIT E ↑
PART B · QUESTION 14

Exhibit E shows US$500,000 lent to the client's son's business, with no written terms. It is counted as an asset.

What do you ask?

BACK TO EXHIBIT E ↑
PART B · QUESTION 15

The client in Exhibit E is 58 and runs the company alone. You have finished with the loan. The client says: 'We can talk about the rest of it when I retire.'

What do you raise?

BACK TO EXHIBIT E ↑

PART C

The calls

Discretion, conflicts and the honest answer, with someone who does not need you.

PART C · QUESTION 16

A client, 72, wants to put 70% of their savings into a friend's private venture. It is legal, losing it would change how they live, and their mind seems made up.

What do you do?

PART C · QUESTION 17

Two funds would suit a client. The bank's own fund pays your desk noticeably more. A rival's fund has lower costs and a better fit.

What do you recommend?

PART C · QUESTION 18

An email from a client's usual address asks you to wire US$400,000 to a new overseas account today. 'In meetings all day, no need to call. It is urgent.'

Your move?

PART C · QUESTION 19

A prospect wants to place US$6m, from selling a business overseas. There are no papers yet. A senior colleague who knows them says: 'They are fine, and if we wait they go elsewhere.'

What do you do first?

PART C · QUESTION 20

A client asks you to stop sending statements anywhere and to hold everything at the bank. 'My accountant does not need to see this account,' they add.

Your move?

PART C · QUESTION 21

A client's daughter, also your client, asks over coffee: 'Between us, how much has Dad actually got? He won't talk about it, and we need to plan.'

Your answer?

PART C · QUESTION 22

At a dinner, another guest says: 'You look after our host's money, don't you? We play golf together.' You do.

Your answer?

PART C · QUESTION 23

A client's portfolio has fallen 18% in a bad quarter. It is within the risk they signed up for, and your notes are in order. They have not called yet.

Your move?

PART C · QUESTION 24

A borrower whose loan you are about to recommend sends you two tickets to a final, worth about US$1,000.

Your move?

0 OF 24 ANSWERED · 0 WITH THE SENIOR READ · 0 STANDS UP · 0 OFF THE LINE

// THE REST OF THE ROUND

Every question here is original; none is any bank's real test. Written for: Private banker.