Bespoke financing on real estate

Stowell adds that real estate is a “good illustration” of how Coutts deals with international clients with UK connectivity.

“We provided an interesting development loan to a consortium of families – they were all related, but there were seven entities of the family; only two of those entities were UK resident, the other entities were in the Far East and the Middle East. We were able to provide them with development finance on a piece of super-prime development in Mayfair.

“That’s our bread and butter, and interestingly enough, of the six apartments that were for sale after the families had taken their apartments, most were sold to clients within our business.”

Flavel says demand for real estate is still strong among the bank’s client base, even after the Brexit vote.

Flavel goes on to illustrate Coutts’ lending capabilities: “With the pound where it is, we’re seeing strong interest in super-prime residential property, and we are the leading lender on super-prime in London.

“We have a flexible approach to lending, recognising that not all clients fit easily into one box.

“What that means in practice is, we look to alternative income streams in terms of serviceability of the loan, and alternative assets in terms of security of the loan as well.

“Most of these people have complex affairs in that they have different types of assets in different currencies and different incomes in different currencies. So a lot of the lending we do on super prime, you simply can’t get elsewhere,” Flavel explains.

Going above and beyond

Coutts’ focus on entrepreneurs extends beyond wealth management and corporate banking facilities for its clients. The bank is keen to establish how it is concerned with “the purpose of wealth”.

Stowell tells PBI: “We spend a lot of time on the emotional quotient (EQ) as well as the intelligence quotient (IQ). That’s where we differ from the competition because we have the beauty of being able to operate across banking – through brilliant banking, flexible credit and reliable wealth management.

“By doing the banking commercially, we make enough money to keep the lights on, so there’s no time pressure from our perspective to move clients from receiving funds through to planning, structuring and ultimately ending in an investment solution.”

Stowell adds that this approach can extend to the issues entrepreneurs face when exiting their businesses.

“It’s almost like bereavement. Many entrepreneurs get to a point where they feel they’ve lost something. They’ve lost this key part of their lives that they’ve sweated over for 10-20 years and now they’re thinking, ‘what do I do with this time and money now that my children are aware of it and my friends realise how wealthy I am?’”

Stowell adds that having conversations over the predicaments that wealthy clients face is only becoming more important, as she notes that entrepreneurs are making money earlier, and thus becoming serial entrepreneurs.

The issues extend to succession planning, which Stowell describes as a “hot topic” for the bank. Coutts facilitates awareness of these issues by connecting its illustrious clientele through networking events.

“We hold specific wealth-succession dinners. For example, last year we brought together eight couples who we thought had similar circumstances. We started the conversation and allowed them to talk to each other with regards to what their hopes, fears and issues are in terms of how they’re going to pass funds down through the legacy, and what legacy means to them.

“A lot of our clients are first- or second-generation entrepreneurs. Rather than the landed gentry of the fifth, sixth or seventh generation, we’re dealing with clients where this is the first time they’ve created wealth,” says Stowell.

Flavel continues: “We bank the most influential and successful families in the UK. The Coutts Club gives the opportunity for our clients to meet other clients of the bank, and there is a very real and tangible benefit for them. We hold various events on topics that are of interest and are not anything to do with investments or passion assets, but things that are relevant to living today.

“The events that clients really do like are related to talking about their businesses. We create the opportunity to transact – to buy and sell businesses, to be involved in businesses that other Coutts clients are involved with as well. We generally act as an introducer to these relationships, rather than get involved.

“We also bring particular investment opportunities that come our way, mainly through our client network, where people have a business that’s seeking further debt or equity and we’ll then do a degree of due diligence – though we expect our clients to do their own due diligence on those investment opportunities as well.”
A holistic approach for the next generation

With millennials being more technically aware and having access to a vast array of digital services, is Coutts’ more traditional holistic approach attractive for the next generation of private banking clients?

Stowell says: “The feedback is that it’s more about having the choice in terms of accessibility. Transparency is also key; they like to be able to see exactly what they’re doing and how much it’s costing them. But as they become more successful, they become as time-poor as their parents were.

“When we put an international lens over the investment piece, we have to make sure what we do in the UK is transferable to an offshore situation, so they don’t have to worry if they’ve been in the US working and they come back to the UK. We can provide them with a US-compliant investment proposition and they don’t have to deal with 15 different people.

“If we can achieve all those things across the platform, people won’t disaggregate how they operate as much as the market is potentially expecting.”

Flavel adds that next-generation clients see Coutts as a way to connect with other young people: “Even though we’ve talked about connectivity at the top end of investment opportunities, actually younger clients are keen to connect with each other.

“When we have an event with 300 clients, there will be 30-45 people there in their late 20s to early 30s, and you can already see that there’s a connectivity that has arisen through their relationship with Coutts.”
The Robo ride

As other private banks start to roll out their own robo-advisory services, Coutts has also developed a similar offering.

In early April, Coutts launched Coutts Invest, an online investment platform, that allows access to a suite of five passive risk-rated portfolios. The service enables clients to invest with an initial lump sum, starting as low as £500.

Flavel reveals to PBI: “It’s an offering that is suited to execution only, and simplified advice and for things like ISAs that people can self-execute without having to go through a full plan.”