Coutts pulls £2bn out of London stock market
coutts
The King’s bank is pulling nearly £2bn out of the London stock market in the latest hammer blow to the beleaguered exchange.
Coutts, which banks the Royal family and operates an ATM in Buckingham Palace, has announced plans to move away from UK stocks and instead invest its money abroad.
The changes will see the amount it invests in UK equities drop from 33pc of assets to just 2pc, meaning Coutts will sell £1.96bn of British stocks and plough the money into other regions.
Coutts said the changes would help it “achieve the best returns for our clients in the most attractive markets”.
The decision by one of Britain’s most iconic banks to shun the London Stock Exchange is yet another blow for the troubled market.
London has been hit by a dearth of listings and a string of exits in recent months, as companies are taken over or opt to move to healthier exchanges in the US or Europe. The London Stock Exchange is currently shrinking at its fastest pace in history, Goldman Sachs said last week.
Charles Hall, an analyst at stockbroker Peel Hunt, said Coutts’ decision should be a “call to arms” for the Government to shake-up policy.
He said: “It may be fine for the fund but it’s pretty disastrous for the UK. What we are consistently doing is allowing capital that was invested in the UK to go and invest in overseas companies, which is one of the reasons why the valuations on our companies are depressed.
“We as a country have a very free market laissez faire approach to our capital markets and this is now turning into a problem.”
Mr Hall added that Coutts was not “unpatriotic” for pulling the funds.
He said: “They’re not paid to be patriotic. People who’ve got their money in Coutts want to have some performance.
“It’s just a reflection of what is happening and a call to arms for the Government.”
Edison Group executive director Neil Shah said: “Coutts’ decision is more than just another blow for the City. It carries the potential to serve as the much-needed wake-up call for the Government to take action.”
Chancellor Jeremy Hunt has made improving the health of London’s stock market a priority and announced reforms intended to boost the market as part of his Edinburgh Reforms in December 2022.
However, the reforms have yet to stem the decline of the market.
Coutts has around £10bn of funds under management. A spokesman 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.”
Coutts is owned by NatWest and as such is part owned by the taxpayer. The Government is NatWest’s largest shareholder with a 29.8pc stake.
Coutts was at the centre of the debanking crisis at NatWest after the private bank decided to close the account of broadcaster and Reform UK president Nigel Farage. It subsequently emerged that Coutts staff had criticised Mr Farage’s political views before deciding to close his account.
The incident triggered a major crisis at NatWest and the exit of chief executive Dame Alison Rose.
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