Royal Bank Coutts has been accused of “abandoning” Britain as it plans to move billions of pounds of its customers’ cash out of the UK.
In a major blow to the City, the 332-year-old lender, of which King Charles is a client, will move £2 billion of British funds to overseas investments.
Analysts say Coutts’ decision to join a “foreign exodus” is part of a “vicious cycle” that is causing London-listed companies to lose value, making them vulnerable to takeovers.
City insiders described the timing as “ironic” as the government will encourage people to invest in British shares when it sells its stake in Coutts owner NatWest this summer.
It is the latest scandal to hit Coutts after the company was plunged into crisis last year when a row erupted over the closure of Nigel Farage’s account, partly because of the political views of the former leader of UKIP.
Coutts was founded in London in 1692, making it the eighth oldest bank in the world.
Coutts, an elite private lender, was founded in London in 1692, making it the eighth oldest bank in the world.
He manages the fortunes of the UK’s richest people, including the royal family and celebrities.
Experts today criticized his decision to snub UK listed companies, amid concerns over the future of the London stock market.
Susannah Streeter, head of currency and markets at Hargreaves Lansdown, said “abandoning the UK stock market” is a “highly questionable decision”.
She said: “Now is the time to support listed UK businesses, rather than join an exodus overseas, given the value that has the potential to be unlocked. »
Coutts was plunged into crisis last year when a row broke out over the closure of Nigel Farage’s account, partly because of the former UKIP leader’s political views.
British stocks are considered undervalued compared to their American counterparts and companies are increasingly abandoning London for New York.
Betting giant Flutter, owner of Paddy Power on the FTSE 100, this week became the latest to vote in favor of leaving the City in favor of Wall Street.
And foreign buyers are circling London’s blue-chip companies in search of bargains.
Footsie companies Royal Mail and Anglo American have become takeover targets in recent weeks.
According to Calastone data, outflows from UK equity funds reached £8 billion in 2023, making Coutts’ planned withdrawal of £2 billion a huge short-term increase.
Among Coutts’ clients is King Charles, pictured visiting a hospital in London on Tuesday.
“This will inevitably put additional selling pressure on the UK market at a time when valuations are already depressed,” said Charles Hall, head of research at investment bank Peel Hunt.
“This continues the theme of globalization in wealth management portfolios, resulting in continued outflows from UK equities.
“This leads to a vicious cycle of depressed valuations and increased mergers and acquisitions.”
He added: “If we don’t have policies that encourage investment in the UK, it is not surprising that there will be capital outflows from the UK and that UK businesses will underperform. »
The government will encourage people to invest in UK shares when it sells its stake in Coutts owner NatWest this summer.
Lindsay James, investment strategist at Quilter, said: “It is becoming increasingly clear that the UK needs to step up its efforts to defend the role of its financial markets. »
Coutts will begin making changes to its investment funds at the end of next month, with the transition expected to be completed in July.
The lender insisted it retained “significant investments” in the UK.
A spokeswoman for the bank said: “Our investment strategy is to achieve the best returns for our clients in the most attractive markets. »
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