Title page: Anyone with less than pounds 100,000 need not apply

To talk about a boom in private client banking sounds like a contradiction in terms. Booms go with busts; both sound a trifle vulgar. Iain Morse coarsely investigates the explosive growth of this exclusive sector.

Old wealth is being superseded by new. In the UK, there are now estimated to be more than 81,000 millionaires, up from just over 31,000 in 1991. A good part of this money is inherited, but not necessarily in the form of country houses and estates. The 1980s created a new class of very highly paid professionals, and loadsamoney entrepreneurs.

These are the new rich, in banking jargon "high net worth individuals", now targeted by private bankers. Gone is the nervous wait on a hard chair before the ordeal of having an overdraft declined over a cup of tepid tea. In its place there is "relationship management" and "understanding all elements of a client's wealth".

An insight into this world was given when the Duchess of York's overdraft with Coutts & Co, the Royal family's private bankers, was revealed to be more than pounds 1m, despite her apparent lack of means to pay this off. Budgie the Helicopter may have crashed, but since then Fergie has signed lucrative deals cashing in on her Royal connections, the latest as a celebrity columnist with Hello! magazine.

It's difficult to imagine your local high street branch manager granting an overdraft in the same circumstances, and this partly explains the rise of private banking. Major clearing banks operate on volume, charging consumers for low-risk credit arrangements. Branch managers have little discretion about how much they can lend to an individual. Limits are set for them by centrally issued guidelines, based on income, employment status and credit history.

Private client banks select clients on grounds of wealth, have fewer accounts, usually in credit, and lower overheads. They are also capable of taking calculated risks about the ultimate value of individual clients. Some, like Arbuthnot Latham, seek out "wealth creators" offering what amounts to a venture capital. Others, like Midland Private Banking, comb out better-off high street customers from their clearing bank arm.

The pressure on high street banks to cut costs, close branches and go direct is not felt in this sector. Instead, the emphasis is on a personalised service that bundles all your main financial planning problems under one umbrella.

There are persuasive reasons for buying this kind of service if you have the money. For example, take the managing director of a privately owned company who wishes to pass on assets to his children without paying undue amounts of inheritance tax. According to Simon Donohoe, director of Midland Private Banking: "Someone in this position may require advice which centrally relates a number of areas, including pension planning, making gifts to children, and setting up trusts which minimise inheritance tax."

Before the growth of private client banking, only the very rich could expect an integrated service of this kind.

Launched in 1994, Midland's service is open to anyone with free assets or annual income of pounds 100,000 or more. This is typical for most private banks. Midland has more than 8,000 clients and funds under management in excess of pounds 3bn. Charging an annual fee of pounds 150, it offers stockbroking services and a range of retail financial products.

Over at Coutts & Co, the most blue blooded of private banks, Emma Wheeler claims: "We invented customer relations." Coutts has been in the business for more than 300 years, providing a service to the aristocracy but also those who made money out of the City and Empire. It also retains a core of very rich foreign clients. Ms Wheeler says: "Our ideal new client is an entrepreneurial professional aged between 35 and 40, earning more than pounds 100,000 a year, with that and more to invest."

According to Ms Wheeler, Coutts takes a holistic approach to financial planning, making wider-based judgements than its competitors, and taking account of intangible factors in an individual's position. Could these have included Fergie's bankable Royal status? Ms Wheeler will not comment.

Could you afford Coutts? The charge for its Signia debit card is pounds 250 a year. On an account balance of less than pounds 3,000, you would pay pounds 45 a quarter in management fees. Above that, no charge. The management fee for investment advisory services is 1 per cent of the fund, plus VAT, with a minimum charge of pounds 10,000. So, no Tessas here.

She confirms that the old rich have capital, the new rich high income and points out why Coutts can benefit both: "We offer a one-stop service, covering all aspects of a wealthy individual's financial planning needs."

Unlike Midland, Coutts offers a global service, with branches in 16 national jurisdictions, including a number of tax havens. The bank is about to launch an art advisory service, which will help clients select and purchase works of art for their private collections.

Defending Coutts from accusations of elitism, Ms Wheeler says: "We have several top 10 pop artists as clients." Posh Spice, perhaps?

Another area where private banks can offer bespoke services lies in the provision of mortgage loans.

While most of us worry about Miras being phased out on home loans up to pounds 30,000, this is unlikely to concern clients of Harrods bank, which specialises in lending on "City lofts and warehouses, requiring substantial renovation where you buy the space then fit it out to your own requirements".

As a rough yardstick, you will know you are rich enough to enjoy a private banking service when you become a client rather than just a customer.

Voices
voicesGood for Lana Del Rey for helping kill that myth, writes Grace Dent
Sport
The Pipes and Drums of The Scottish Regiments perform during the Opening Ceremony for the Glasgow 2014 Commonwealth Games at Celtic Park on July 23, 2014 in Glasgow, Scotland.
Commonwealth GamesThe actor encouraged the one billion viewers of the event to donate to the children's charity
Sport
Karen Dunbar performs
Entertainers showcase local wit, talent and irrepressible spirit
Sport
Members of the Scotland deleagtion walk past during the opening ceremony of the 2014 Commonwealth Games at Celtic Park in Glasgow on July 23, 2014.
PROMOTED VIDEO
Arts and Entertainment
The Tour de France peloton rides over a bridge on the Grinton Moor, Yorkshire, earlier this month
film
Life and Style
fashion Designs are part of feminist art project by a British student
News
Very tasty: Vladimir Putin dining alone, perhaps sensibly
news
Life and Style
Listen here: Apple EarPods offer an alternative
techAre custom, 3D printed earbuds the solution?
Arts and Entertainment
Top guns: Cole advised the makers of Second World War film Fury, starring Brad Pitt
filmLt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a uniform
News
The University of California study monitored the reaction of 36 dogs
sciencePets' range of emotions revealed
News
Snoop Dogg pictured at The Hollywood Reporter Nominees' Night in February, 2013
people... says Snoop Dogg
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
A scene from Shakespeare in Love at the Noel Coward Theatre
theatreReview: Shakespeare in Love has moments of sheer stage poetry mixed with effervescent fun
News
Joining forces: young British men feature in an Isis video in which they urge Islamists in the West to join them in Iraq and Syria
newsWill the young Britons fighting in Syria be allowed to return home and resume their lives?
Arts and Entertainment
The nomination of 'The Wake' by Paul Kingsnorth has caused a stir
books
News
i100
Life and Style
food + drinkZebra meat is exotic and lean - but does it taste good?
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.

iJobs Job Widget
iJobs Money & Business

PMO Analyst - London - Banking - £350 - £400

£350 - £400 per day: Orgtel: PMO Analyst - Banking - London - £350 -£400 per d...

Cost Reporting-MI Packs-Edinburgh-Bank-£350/day

£300 - £350 per day + competitive: Orgtel: Cost Reporting Manager - MI Packs -...

Insight Analyst – Permanent – Up to £40k – North London

£35000 - £40000 Per Annum plus 23 days holiday and pension scheme: Clearwater ...

Test Lead - London - Investment Banking

£475 - £525 per day: Orgtel: Test Lead, London, Investment Banking, Technical ...

Day In a Page

Screwing your way to the top? Good for Lana Del Rey for helping kill that myth

Screwing your way to the top?

Good for Lana Del Rey for helping kill that myth, says Grace Dent
Will the young Britons fighting in Syria be allowed to return home and resume their lives?

Will Britons fighting in Syria be able to resume their lives?

Tony Blair's Terrorism Act 2006 has made it an offence to take part in military action abroad with a "political, ideological, religious or racial motive"
Beyoncé poses as Rosie the Riveter, the wartime poster girl who became a feminist pin-up

Beyoncé poses as Rosie the Riveter

The wartime poster girl became the ultimate American symbol of female empowerment
The quest to find the perfect pair of earphones: Are custom, 3D printed earbuds the solution?

The quest to find the perfect pair of earphones

Earphones don't fit properly, offer mediocre audio quality and can even be painful. So the quest to design the perfect pair is music to Seth Stevenson's ears
US Army's shooting star: Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform

Meet the US Army's shooting star

Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform
Climate change threatens to make the antarctic fur seal extinct

Take a good look while you can

How climate change could wipe out this seal
Should emergency hospital weddings be made easier for the terminally ill?

Farewell, my lovely

Should emergency hospital weddings be made easier?
Man Booker Prize 2014 longlist: Crowdfunded novel nominated for first time

Crowdfunded novel nominated for Booker Prize

Paul Kingsnorth's 'The Wake' is in contention for the prestigious award
Vladimir Putin employs a full-time food taster to ensure his meals aren't poisoned

Vladimir Putin employs a full-time food taster

John Walsh salutes those brave souls who have, throughout history, put their knives on the line
Tour de France effect brings Hollywood blockbusters to Yorkshire

Tour de France effect brings Hollywood blockbusters to Yorkshire

A $25m thriller starring Sam Worthington to be made in God's Own Country
Will The Minerva Project - the first 'elite' American university to be launched in a century - change the face of higher learning?

Will The Minerva Project change the face of higher learning?

The university has no lecture halls, no debating societies, no sports teams and no fraternities. Instead, the 33 students who have made the cut at Minerva, will travel the world and change the face of higher learning
The 10 best pedicure products

Feet treat: 10 best pedicure products

Bags packed and all prepped for holidays, but feet in a state? Get them flip-flop-ready with our pick of the items for a DIY treatment
Commonwealth Games 2014: Great Scots! Planes and pipers welcome in Glasgow's Games

Commonwealth Games 2014

Great Scots! Planes and pipers welcome in Glasgow's Games
Jack Pitt-Brooke: Manchester City and Patrick Vieira make the right stand on racism

Jack Pitt-Brooke

Manchester City and Patrick Vieira make the right stand on racism
How Terry Newton tragedy made iron men seek help to tackle their psychological demons

How Newton tragedy made iron men seek help to tackle their psychological demons

Over a hundred rugby league players have contacted clinic to deal with mental challenges of game