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Coutts under pressure for pulling £2bn out of London stock market

A general view of Coutts bank on The Strand on July 20, 2023 in London. (Photo by Dan Kitwood/Getty Images)
A general view of Coutts bank on The Strand on July 20, 2023 in London. (Photo by Dan Kitwood/Getty Images)

Royal bank Coutts is facing criticism from City figures over plans to pull roughly £2bn of clients’ funds out of London’s stock market.

On Thursday, the iconic 332-year-old private bank and wealth manager confirmed plans to cut its investment in UK equities from 33 per cent of assets to only three per cent as it moves the money into foreign company shares.

Under the plans, Coutts would have 65 per cent of assets in North American equities and 13 per cent in Europe. The business has around £10bn in funds under management.

The news comes as the government races to inject life into London’s beleaguered stock market through a range of capital markets reforms, including a British ISA.

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It is also planning to offer part of its remaining 28 per cent stake in Natwest, which owns Coutts, to retail investors as early as this summer.

Coutts has said its decision would help it “achieve the best returns for our clients in the most attractive markets”.

However, City analysts have voiced criticism. Charles Hall, head of research at investment bank Peel Hunt, said the move would be “pretty disastrous for the UK”, which is already suffering from heavy outflows.

Hall noted the “irony” of the situation. “The government is aiming to sell down… its stake in Natwest in the summer, but at the same time Coutts is reducing fund allocations to the UK,” he said.

“This will inevitably put further selling pressure on the UK market at a time when valuations are already depressed.”

Neil Shah, an executive director at Edison Group, added: “Coutts decision is more than just another blow for the City. It carries the potential to serve as the much-needed wake-up call for the government to take action.”

He said the government and London Stock Exchange needed to show “more strong leadership”, calling for pension reform and the abolition of the stamp duty on UK stocks.

Coutts has been no stranger to controversy in recent times. Last summer, it was at the centre of a “debanking” row with former Ukip leader Nigel Farage that triggered the resignations of both Coutts’ boss Peter Flavel and Natwest CEO Dame Alison Rose.

A Coutts spokesperson said on Thursday: “We retain significant investment in the UK and our investment strategy is to achieve the best returns for our clients in the most attractive markets.

“We closely follow the performance of all markets in line with our individual client needs and our House Views are subject to constant review.”