UK customers holding multi-currency bank accounts with Citi have been told their accounts will be closed unless they can afford to sign up to its wealth management service.
Citi clients with a sterling current account had previously been able to hold linked US dollar and euro current accounts with no additional fees, which could all be accessed through the same debit card.
Marketed as being “in step with your busy international lifestyle”, the multi-currency accounts were previously available fee-free to individuals who credited their account with more than £3,500 each month, or had a balance over £35,000. If neither of these criteria were met, the account carried a monthly fee of £15.
However, letters were sent to a number of Citi clients in May stating that multi-currency accounts would be closed on or shortly after July 17 for customers not signed up to Citigold Wealth Management, which carries a minimum investment threshold of £150,000.
“We have recently conducted a review of your account, and noticed that you are not benefiting from our core wealth management services,” the letter said. “We plan to close your Citi account . . . we recognise that this may not be ideal and apologise for the short-term inconvenience that this may cause.”
Customers who feel Citi’s wealth management service may “suit [their] financial aspirations” are directed to its website, where the minimum threshold of £150,000 is made clear.
Citigroup declined to say how many customers would be affected. In March, the group announced it would close three of its four London bank branches.
“I’ve had an account with Citi for years, and thought I had a good relationship with them, so I feel very used,” said one FT Money reader, who preferred to remain anonymous.
“To suddenly say that they’re closing branches and on top of that, they don’t want my business was quite a shock. For all they know, I could have £150,000 to invest.”
Citi’s move continues the growing trend for wealth managers to close the doors on the moderately rich in favour of wealthier individuals. This results from growing regulatory costs and changes to rules on how wealth managers charge their clients, including stricter requirements for companies to prove the products they recommend fit with customers’ circumstances.
Lee Goggin, co-founder of www.findawealthmanager.com, said that restricting the perk to the very wealthy showed how much banks’ profit margins were being squeezed in a world of very low interest rates.
“They will only want to deal in big-volume currency trades,” he said, anticipating that small, internet-based forex firms would plug the gap for less wealthy customers.
Others suggest the closures were aimed at pushing less profitable clients back on to the high street, while encouraging wealthier clients to hold more of their assets with a single bank.
“Largely driven by increasing compliance costs, many private banks and wealth managers are only interested in customers who will sign up to the fatter-margined wealth management services,” said Holly Mackay, founder of Boring Money, the consumer finance website.
She added: “If clients don’t have substantial six-figure sums to allocate to proprietary wealth management solutions [which often have] a price tag of 2 per cent plus, they are politely but firmly shown the door.”
Citibank confirmed that the bank would “no longer offer standalone foreign currency accounts or savings accounts”.
“As a result, we have notified a small number of UK clients that we will be closing accounts that they hold with us. We continue to ensure that all of our clients are benefiting from our core wealth management services.”
“We have a very specific set of consumer services and our focus is on supporting global clients with their wealth management needs.”
Savings champion Andrew Hagger said individuals who not wealthy enough to hold multi-currency accounts with Citi could consider alternatives from the likes of Revolut and Centtrip — both offer foreign currency cards, but also the ability to transfer money abroad to any bank, business or friend in multiple currencies.
A few high street banks still offer foreign currency accounts. All come with protection from the Financial Services Compensation Scheme (FSCS), which covers up to £85,000 per person, per provider.
Barclays offers accounts in a range of foreign currencies, including dollars and euros. Barclays Foreign Currency account has a minimum balance of $2,000. If you drop below this balance, there is a charge of £7 per quarter. This charge does not apply for the Euro Currency account.
HSBC’s currency account is available in 14 currencies, including dollar and euro, and has no minimum balance and no monthly account fee. HSBC’s Expat service (also open to non-expats) also offers foreign currency accounts, but new customers need to maintain a minimum balance of £60,000.
Lloyds no longer offers a foreign currency account to retail customers, although it still has one for customers of its Lloyds Mayfair wealth management service who hold more than £2m in savings and investments.