Join the blue bloods

If you've got a princely sum, the banks are vying for your custom

Coutts, the élite bank favoured by the Royal Family, Premier League footballers, pop stars and lottery winners, is considered the ultimate in private banking. In fact, there is far more choice available to the rich, with a wide range of private or premium banking services coming on to the market.

Coutts, the élite bank favoured by the Royal Family, Premier League footballers, pop stars and lottery winners, is considered the ultimate in private banking. In fact, there is far more choice available to the rich, with a wide range of private or premium banking services coming on to the market.

Increasing wealth is generating demand for these services, leading to a need for more sophisticated financial products and advice.

To bank with Coutts, you need liquid assets of at least £500,000. However, other banks offer private services for people with more restricted funds. For example, the Royal Bank of Canada and Investec, the South African bank, both have a private banking facility for people with a minimum of £10,000 to invest. HSBC has a private client service for those with £30,000 or more, and NatWest's private banking service is available to those with at least £75,000 in liquid assets.

Private banking is little understood: most people think it is just like normal banking but for the well-off. In fact, it is a complete service. "If your needs are purely banking transactions, then you probably don't need a private account," says Paul Feeney, managing director of NatWest Private Banking. "Private banking offers a wealth management service that gives advice on how to make the most of your money."

Andrew Fisher, group chief executive at Coutts, describes private banking as a "holistic service", which offers advice on how best to protect and manage your wealth. This explains why it is associated with the ultra rich, as their finances are far more complicated to organise. They require in-depth advice on matters such as how to protect their money from capital gains tax and inheritance tax, and where to invest.

If you are putting large amounts of money into funds such as unit or investment trusts, you will end up paying high management fees if you invest yourself. If, however, you go through a private bank, then the buying power it commands by combining the funds of several customers enables it to negotiate lower charges.

"We have a different set of products and services depending on the wealth that has accumulated," says Phil Cutts, vice-president of Royal Bank of Canada Global Private Banking. Those with £500,000 to invest will have extra options but also more chance of facing complications than those with £30,000, so a different service is required.

According to HSBC, the private banking market is growing by 20 per cent a year. Investment bank Merrill Lynch says that some 13 per cent of the adult population in the UK have liquid assets of between £100,000 and £200,000, while about 6.5 per cent have over £200,000.

So while private banking used to be targeted at very high net worth individuals, the fact that so many people now have considerable assets makes them attractive customers to banks. In addition, says Martyn Begbour, senior business development manager at HSBC Private Client, banks now realise that customers are demanding more as they become richer and raise their expectations of financial products and services.

Mr Fisher notes that compound interest is a big factor in the rapid growth of the private banking market. This, coupled with the fact that Britain has not been debilitated by war or crisis for many years, means we have been able to accrue more money. The knock-on effect is that an increasing number of people are inheriting this wealth from their parents, passing it down through the generations.

The main area of growth in new money, however, is entrepreneurial wealth. Lots of people are making cash through owning their own business or exercising share options, and such people need the advice of a private banker. Increased regulation means the fairly basic services offered by a retail bank may not be sophisticated enough.

"Private banking provides a structured service," says Leon Blitz at Investec. "It is for clients who require independent advice, not off-the-shelf [products]."

The fact that overseas banks such as Investec and Royal Bank of Canada are offering private banking to UK customers illustrates the global perception that there is a huge target market here. NatWest only launched its private banking arm last week, while investment house Schroders has recently been granted a licence by the Financial Services Authority to launch its own private bank, Schroders & Co.

"Wealth management is the fastest-growing area of UK financial services," says Mr Feeney at NatWest. "In the past, the market was split between the super-high net worth banks and the high street. There is now a growing number of banks targeting this in-between market."

* Contacts: Coutts, 020 7753 1719; HSBC, 02380 531467; Investec, 020 7597 4000; NatWest, 0113 241 6021; Royal Bank of Canada, 020 7653 4746.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SThree: HR Benefits Manager

    £40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

    Recruitment Genius: Office Manager / Financial Services

    £30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...

    Jemma Gent: Year End Accountant

    £250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...

    Jemma Gent: Management Accountant

    £230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...

    Day In a Page

    HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

    Scientists hail daily pill that protects against HIV infection

    Breakthrough in battle against global scourge – but will the NHS pay for it?
    How we must adjust our lifestyles to nature: Welcome to the 'Anthropocene', the human epoch

    Time to play God

    Welcome to the 'Anthropocene', the human epoch where we may need to redefine nature itself
    MacGyver returns, but with a difference: Handyman hero of classic 1980s TV series to be recast as a woman

    MacGyver returns, but with a difference

    Handyman hero of classic 1980s TV series to be recast as a woman
    Tunnel renaissance: Why cities are hiding roads down in the ground

    Tunnel renaissance

    Why cities are hiding roads underground
    'Backstreet Boys - Show 'Em What You're Made Of': An affectionate look at five middle-aged men

    Boys to men

    The Backstreet Boys might be middle-aged, married and have dodgy knees, but a heartfelt documentary reveals they’re not going gently into pop’s good night
    Crufts 2015: Should foreign dogs be allowed to compete?

    Crufts 2015

    Should foreign dogs be allowed to compete?
    10 best projectors

    How to make your home cinema more cinematic: 10 best projectors

    Want to recreate the big-screen experience in your sitting room? IndyBest sizes up gadgets to form your film-watching
    Manchester City 1 Barcelona 2 player ratings: Luis Suarez? Lionel Messi? Joe Hart? Who was the star man?

    Manchester City vs Barcelona player ratings

    Luis Suarez? Lionel Messi? Joe Hart? Who was the star man at the Etihad?
    Arsenal vs Monaco: Monaco - the making of Gunners' manager Arsene Wenger

    Monaco: the making of Wenger

    Jack Pitt-Brooke speaks to former players and learns the Frenchman’s man-management has always been one of his best skills
    Cricket World Cup 2015: Chris Gayle - the West Indies' enigma lives up to his reputation

    Chris Gayle: The West Indies' enigma

    Some said the game's eternal rebel was washed up. As ever, he proved he writes the scripts by producing a blistering World Cup innings
    In Ukraine a dark world of hybrid warfare and murky loyalties prevails

    In Ukraine a dark world of hybrid warfare

    This war in the shadows has been going on since the fall of Mr Yanukovych
    'Birdman' and 'Bullets Over Broadway': Homage or plagiarism?

    Homage or plagiarism?

    'Birdman' shares much DNA with Woody Allen's 'Bullets Over Broadway'
    Broadchurch ends as damp squib not even David Tennant can revive

    A damp squib not even David Tennant can revive

    Broadchurch, Series 2 finale, review
    A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower: inside the mansion of Germany's 'Bishop of Bling'

    Inside the mansion of Germany's 'Bishop of Bling'

    A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower