BANK of Scotland has offloaded its American investment portfolio clients – but insisted that the decision was nothing to do with potentially costly tax changes currently being considered in the US.
Private client account holders with links to the US have been sent a letter from Bank of Scotland's portfolio management division, informing them that they will no longer be able to act as their investment manager.
Bank of Scotland, owned by Lloyd
s Banking Group, insists that the withdrawal of the service is part of an internal review of its businesses made last year – but the letter told customers that it "had no choice" but to withdraw the service.
Weekend reports claimed that the decision had been made ahead of expensive proposals drawn up by the US government to reduce tax evasion.
The crackdown, put forward by the Obama administration, could see British financial institutions forced to take on the collection of American taxes and share information in the same way as is currently required of US financial institutions.
But a spokesman for the bank yesterday insisted that a link between the withdrawal of the accounts and the Obama administration's tax changes was "completely wrong".
Account holders said the bank had been unclear as to why their accounts had been withdrawn and expressed fears that the proposed tax rules would make it difficult for them to find a new bank.
The letter, seen by The Scotsman, told customers: "I am writing to inform you of an important change in policy regarding clients who are resident, domiciled or linked to the United States by property or asset holdings.
"The USA has a mature regulatory environment governed by its Securities and Exchange Commission. These regulations mean that we are not licensed to manage portfolios for US clients."
It attached a definition for a "US person" and added: "Our records suggest you fulfil these criteria and that we will have no choice but to cease acting as your investment manager."
One customer, who has banked with Bank of Scotland for more than 15 years, said: "If it is a business decision, I don't understand why they didn't say that to me in the letter. It clearly implies that it is to do with US regulations.
"I am worried that it will be difficult for me to find another bank if it is going to be costly for them to have me as a customer."
It is understood that only a small number of people – around 30 – have been affected by the decision, while some will be eligible to move their accounts to Lloyds' offshore services. Current accounts will still be available to these customers.
A spokesman for Lloyds Banking Group said: "The business took the decision in 2008 to no longer offer this service and this was reaffirmed following a review earlier this year.
"The group's other private banking and private client businesses continue to offer a service to US clients as usual."
The full article contains 497 words and appears in The Scotsman newspaper.
