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

    Recruitment Genius: Sales Assistant / Buyer

    £15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

    Recruitment Genius: Customer Service Advisor

    £15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

    Recruitment Genius: Compliance Manager

    £40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

    Day In a Page

    Greece says 'No': A night of huge celebrations in Athens as voters decisively back Tsipras and his anti-austerity stance in historic referendum

    Greece referendum

    Greeks say 'No' to austerity and plunge Europe into crisis
    Ten years after the 7/7 terror attacks, is Britain an altered state?

    7/7 bombings anniversary

    Ten years after the terror attacks, is Britain an altered state?
    Beautiful evening dresses are some of the loveliest Donatella has created

    Versace haute couture review

    Beautiful evening dresses are some of the loveliest Donatella has ever created
    No hope and no jobs, so Gaza's young risk their lives, climb the fence and run for it

    No hope and no jobs in Gaza

    So the young risk their lives and run for it
    Fashion apps: Retailers roll together shopping and social networking for mobile customers

    Fashion apps

    Retailers roll together shopping and social networking for mobile customers
    The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

    Gaping hole at the heart of the European Union

    Treatment of Greece has shown up a lack of genuine legitimacy
    Number of young homeless in Britain 'more than three times the official figures'

    'Everything changed when I went to the hostel'

    Number of young homeless people in Britain is 'more than three times the official figures'
    Compton Cricket Club

    Compton Cricket Club

    Portraits of LA cricketers from notorious suburb to be displayed in London
    London now the global money-laundering centre for the drug trade, says crime expert

    Wlecome to London, drug money-laundering centre for the world

    'Mexico is its heart and London is its head'
    The Buddhist temple minutes from Centre Court that helps a winner keep on winning

    The Buddhist temple minutes from Centre Court

    It helps a winner keep on winning
    Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

    Is this the future of flying?

    Battery-powered planes made of plastic, and without flight decks
    Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

    Isis are barbarians

    but the Caliphate is an ancient Muslim ideal
    The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

    Curse of Brink's Mat strikes again

    Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
    Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

    'The ministers talk to us about miracles'

    Why Greeks are cynical ahead of the bailout referendum
    Call of the wild: How science is learning to decode the way animals communicate

    Call of the wild

    How science is learning to decode the way animals communicate