Coutts Bank is preparing to shift billions of pounds worth of clients’ funds out of the London stock market into foreign company shares in a huge blow to the City.
The 332-year-old lender, which has King Charles as a client and, until recently, former UKIP leader Nigel Farage, will transfer £2 billion from British funds into overseas investments, reinforcing the “inexorable trend of outflows from the UK”, Charles Hall of investment bank Peel Hunt said.
At an event this week the bank’s chief investment officer Fahad Kamal said: “Currently, about 20 per cent of a standard balanced portfolio here is UK stocks, which is something of an anachronism.
“It would be closer to three per cent or four per cent if it were more commensurate with the proportion of UK stocks in global stock markets. So this is a recalibration.
“We are adjusting our compass accordingly.”
Commenting in the Evening Standard, Jonathan Prynn said Coutts’ lack of faith in Britain is a worrying sign for the City.
“It is one of the biggest yet most under-reported challenges facing UK policymakers as they attempt to get the British economy moving again.”
British stocks are increasingly seen as undervalued compared to their American peers and firms are increasingly ditching London for New York.
Betting giant Flutter, the FTSE 100 owner of Paddy Power, this week became the latest to vote to quit the City in favour of Wall Street.
And foreign buyers are circling London’s blue-chip companies in pursuit of a bargain.
Footsie firms Royal Mail and Anglo American have become takeover targets in recent weeks.
According to data from Calastone, outflows from UK equity funds hit £8 billion in 2023 – making the £2 billion planned withdrawal by Coutts a huge increase in the short term.
“This will inevitably put further selling pressure on the UK market at a time when valuations are already depressed,” Hall added.
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