Royal bank Coutts is accused of 'abandoning' Britain with its plans to shift £2billion from UK funds into overseas investments - as analysts warn move is part of a 'vicious circle' causing London-listed firms to lose value

Royal bank Coutts has been accused of 'abandoning' Britain as it plans to shift billions of pounds of clients' cash out of the UK.

In a blow to the City, the 332-year-old lender, where King Charles is a client, will transfer £2billion from British funds into overseas investments.

Analysts said Coutts' decision to join a 'foreign exodus' is part of a 'vicious circle' causing London-listed firms to lose value, making them vulnerable to takeovers.

City insiders blasted the timing as 'ironic' as the Government will encourage people to invest in British stocks when it sells its stake in Coutts' owner NatWest this summer.

It is the latest scandal to hit Coutts after it was plunged into crisis last year when a row broke out over the closure of Nigel Farage's account, in part due to the ex-Ukip leader's political views.

Coutts, an elite private lender, was founded in London in 1692, making it the eighth oldest bank in the world.

It handles the fortunes of the UK's richest people, including the Royal Family and celebrities.

Experts today slammed its decision to snub Britain's listed companies amid concerns over the future of London's stock market.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said 'abandoning the UK stock market' is a 'highly questionable decision.'

She said: 'The time is ripe to back British listed businesses, rather than join a foreign exodus, given the value which has the potential to be unlocked.'

British stocks are 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 £8bn in 2023 – making the £2billion 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,' Charles Hall, head of research at investment bank Peel Hunt, said of

'This continues the theme of globalisation in wealth management portfolios, which is resulting in continued outflows from UK equities.

'This is driving a vicious circle of depressed valuations and heightened mergers and acquisitions.'

He added: 'If we do not have policies that encourage UK investment, then it is not surprising that there are outflows from the UK and that UK companies underperform.'

Lindsay James, investment strategist at Quilter, said: 'It is becoming ever more apparent that the UK must work harder to defend the role of its financial markets.'

Coutts will start to make the changes to its investment funds at the end of next month, with the transition set to be completed in July.

The lender insisted that it retains 'significant investment' in the UK.

A spokeswoman for the bank said: 'Our investment strategy is to achieve the best returns for our clients in the most attractive markets.'