Queen's lender withdraws free banking for anyone less than £250,000 in the black

Coutts, the state-owned private bank whose clients famously include the Queen, is withdrawing free banking from anyone who doesn't do at least £250,000 worth of business with it, The Independent has learnt.

The company, which has been owned by Royal Bank of Scotland since it took over the National Westminister Bank, had previously not imposed charges on anyone who maintained a balance of at least £10,000 in their current account. However, these customers have been told they will now be charged £150 every three months for maintaining their accounts unless their borrowings, investments or deposits with Coutts total a combined £250,000 or more.

In a letter to customers, the bank described the change in terms as "a difficult decision to make". However, it blamed the move on "the increased costs of providing a full private banking service".

Before 2008, Coutts offered free banking to clients who maintained a balance of just £5,000, and at one point the figure was as low as £3,000. However, a spokesman said the company was operating a strategy of "looking for clients with £500,000 of liquid assets upwards". "We are encouraging people to either use our full range of services or to pay the quarterly charge," the spokesman added.

One Coutts client, who asked not to be named, described the change as "outrageous" yesterday. "You have to wonder if they are simply trying to chase away business," he said. "They have certainly lost mine. A £600 fee is not an insignificant charge."

Asked if the change of terms would also apply to its most famous client, the Queen, the spokesman declined to comment, saying: "We cannot discuss individual cases."

The Queen has recently embarked on an austerity drive after accounts were published revealing that she had had to dip into her reserves to continue to fulfil her ceremonial duties.