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Coutts, the private bank owned by state-backed NatWest, plans to shift customers away from UK equities to access “mega-themes” in international stocks, despite government efforts 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 pivoting away from its UK “home bias”. The move would result in at least £2bn of its £43bn portfolio being redirected towards global equities, with a particular focus on the US.
“Currently, about 20 per cent of a standard balanced portfolio here is UK stocks, 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 commensurate with the proportion of UK stocks in global stock markets.”
The strategic shift comes at a time of turmoil for London capital markets, as a number of companies, including Cambridge-based chipmaker Arm, have snubbed the City in favour of listing in the US to fetch a higher valuation from investors. London has also suffered from a dearth of initial public offerings, having raised just £300mn in the first quarter — lagging behind mainland Europe. Meanwhile, London-listed companies including Darktrace and Anglo American remain attractive to foreign bidders.
Kamal — who dubbed the shift a “recalibration” — said the move to global stocks would give customers exposure to the “mega-themes”, such as tech shares, that “are more difficult to access through the UK.”
The change also appears at odds with a wider government push to revive investment into the London market, supported by plans for a British Isa and a mass retail sale of NatWest stock, which has been state-backed since its rescue as Royal Bank of Scotland at the height of the financial crisis.
Chancellor Jeremy Hunt has made a commitment 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 ceased to be a controlling shareholder in NatWest in March after cutting its stake to just below 30 per cent. Coutts was embroiled in a scandal last year after the centuries-old bank shut down politician Nigel Farage’s account. The former leader of Ukip and the Brexit party claimed he had been “debanked” for his views and obtained an internal dossier that revealed the bank deemed his politics to be “at odds with our position as an inclusive organisation”.
The incident, which toppled NatWest boss Dame Alison Rose, led to the resignation of Coutts chief executive Peter Flavel last year. The bank has since poached UBS executive Emma Crystal to lead the private wealth manager.
One person familiar with Coutts’ strategy, which was first reported by the London Evening Standard, said the wider market trend towards global equities was driven by client demand and that it was still able to build bespoke UK-focused portfolios for its clients.
A Coutts spokesperson said: “We retain significant investment in the UK and our investment strategy is to achieve the best returns for our clients in the most attractive markets.
“We closely follow the performance of all markets in line with our individual client needs and our House Views are subject to constant review,” the person added.
