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Coutts, the private bank owned by state-backed NatWest, plans to shift clients away from British equities and access “mega themes” in international stocks even as the government seeks to revive London’s capital markets.
Coutts said in a note to clients that it was making a “fundamental change” to its investment strategy by moving away from its UK “home bias”. The move would see at least £2bn of its £43bn portfolio shifted into global equities, with a particular focus on the US.
“Currently a typical balanced portfolio here is about 20 percent British equities, which is something of an anachronism,” Coutts chief investment officer Fahad Kamal told clients earlier this week. “It would be closer to 3 per cent or 4 per cent if it were more in line with the proportion of UK stocks in global stock markets.”
The strategic move comes at a time of turmoil in London’s capital markets as a number of companies, including Cambridge-based chipmaker Arm, have rejected the city and opted to list in the US in order to attract higher valuations from investors achieve. London has also suffered from a lack of IPOs, raising just £300 million in the first quarter, lagging behind mainland Europe. Meanwhile, London-listed companies such as Darktrace and Anglo American remain attractive to foreign bidders.
Kamal – who described the move as a “recalibration” – said the move to global equities would give clients access to the “mega themes” such as technology stocks that are “more difficult to access via the UK”.
The change also appears to be at odds with a wider government push to revive investment in the London market, supported by plans for a UK ISA and a bulk sale of NatWest shares, which have been government-backed since being rescued as the Royal Bank of Scotland Peak of the financial crisis.
Chancellor Jeremy Hunt has pledged to return NatWest to private ownership by 2026, with the public share sale part of a drive to create a “new generation of retail investors”.
The government stopped being a majority shareholder in NatWest in March after reducing its stake to just under 30 percent. Coutts was embroiled in scandal last year after the century-old bank closed politician Nigel Farage’s account. The former Ukip and Brexit Party leader claimed he was “sacked from the bank” because of his views and was given an internal dossier showing the bank believed his policies were “contrary to our position as an integrative organization”.
The incident that brought down NatWest boss Dame Alison Rose led to the resignation of Coutts boss Peter Flavel last year. Since then, the bank has poached UBS manager Emma Crystal to head the private asset manager.
A person familiar with Coutts’ strategy, first reported by the London Evening Standard, said the broader market trend toward global equities was driven by client demand and that the firm was still able to tailor Building UK-focused portfolios for its clients.
A Coutts spokesman said: “We retain significant investments in the UK and our investment strategy is to achieve the best returns for our clients in the most attractive markets.”
“We closely monitor the development of all markets in line with the needs of our individual customers and our home valuations are subject to constant review,” the person added.