Strategy
Another European Private Bank Turns Away From US Clients
C Hoare & Co, the venerable London-based private bank, has closed down portfolio management for its US clients, citing stricter regulation.
The private bank will continue to offer services other than investment management to its clients in the US, but the bank’s chief executive, Alexander Hoare, suggested that it might come to an end “if they (the US regulators) continue to go down that path.”
Hoare, a member of the original family, told FamilyWealthReport that the firm's US client base is “negligible.” “It is not a problem for the bank, it is a problem for the customers,” he said.
“The SEC (the Securities and Exchange Commission) and the IRS (the Inland Revenue Service) have made it more difficult for some time to service American clients in London,” a member of the bank’s investment team told this publication.
“Most of our funds are not eligible for US investors; we do not invest in individual securities,” the investment professional said.
C Hoare & Co, which is one of the oldest private banks in the UK, is the latest in a string of companies that have had to turn down US business as a result of a crackdown on offshore tax evasion. HSBC, UBS and Julius Baer are some of the European players that have stopped providing offshore banking to US clients.
Newly-passed legislation in the US, called FATCA, seeks to stamp out tax evasion by US citizens. One of its practical effects is to raise the compliance burden on what are called Foreign Financial Institutions that do business with expat US nationals and Green Card holders, or which invest in US financial assets. The legislation in some ways builds on the compliance requirements of the Qualified Intermediaries regime. A number of firms, such as Societe Generale, the French bank, have told this publication that FATCA will significantly increase the costs of serving US citizens.
Some firms, however, such as RBC Wealth Management, part of Royal Bank of Canada, and London & Capital, a wealth manager, have sought to market their services to US expats in recent years.