Tycoon to sue Coutts for ‘losing’ millions

THE Queen's bankers Coutts could be sued by one of Britain's leading businessmen who fears the bank might have lost much of his £160million fortune in the financial crisis.

Sir Keith Mills, who helped to orchestrate London's 2012 Olympic bid, has launched a campaign in which he accuses Coutts of putting him into "safe" savings bonds marketed by deeply troubled financial institution AIG which had to be bailed out by the American government to the tune of $85 billion (£56 billion).

The tycoon is now lobbying other Coutts customers who are likely to be in the same position and has formed an action group which could be hugely embarrassing politically.

While it markets itself as a private bank to the nation's wealthy, Coutts is in fact a division of Royal Bank of Scotland - the high-street banking group which got itself in so much trouble the Government now owns a 57 per cent stake as part of the taxpayers' £500billion bail-out of Britain's banks.

Sir Keith made successive fortunes from founding the Air Miles airline travel loyalty scheme and then running Nectar, the loyalty scheme whose members include Sainsbury's and BP.

When Nectar was sold he is reckoned to have banked most of the personal £160 million proceeds with Coutts.

In an open letter to fellow Coutts customers on a website www.couttsaigactiongroup.org, Sir Keith said: "Coutts recommended to me and I assume many other customers that I place my money in AIG Life Premier Bonds as a way of protecting my capital.

"Coutts said my money would be safe as AIG was the largest insurance company in the world, AA rated, and that the bonds provided instant access to my money just like a deposit account. Later, given the negative press reports about the future of AIG I queried with Coutts in writing the safety of keeping my money with AIG but they replied that they did not have concerns about these bonds so I retained them.

"Then this September payouts from the bonds were frozen.

"Bondholders have now been forced to accept two choices. Firstly is we try to withdraw our cash now, we face the prospect of losing large sums of money. Or secondly we have our money tied up with AIG for three-and-a-half years with no certainty that our money will ever be returned."

Coutts says it did not mis-sell financial products and added: "It was made clear that the investment was low risk but not risk-free and that the value of the investment could go up as well as down."

It is reckoned British investors have a total exposure of £5 billion to AIG bonds. The bonds carry a minimum investment of £100,000 and until recently were offering to pay interest of 6.5 per cent - way above what was available in most savings accounts. It is understood that anyone attempting to get out off AIG bonds is being offered only 86.5p for every £1 invested.