COUTTS & Co, which opened for business in Hong Kong last month, plans to concentrate initially on securities trading and lending. These are the two services which have proved most popular with Asian clients, according to Coutts' executive vice-president and general manager Andrew Barber. 'It is driven by market demand,' he said. 'Private clients' appetite for credit is very evident in Asia, where the private banking market is much driven by fully-secured lending.' Coutts has been managing finances for Asian clients for many years but, until this year, it did all its investments outside of Hong Kong. Lending specialists within Coutts will approve loans and set terms. 'We will lend against any tradeable quality asset,' Mr Barber said. In line with normal prudent banking practises, Hong Kong blue chip stocks would be considered good security, but not Indonesian second or third-line stocks, he said. A far higher security value would be assigned to a triple A bond than a second-line Hong Kong stock. Mr Barber said Coutts' in-house treasury function would give its loans a competitive edge. 'This is the most competitive private bank market in the world. Loan pricing is critical and ours will be competitive simply because we have our treasury in-house - it is part of our profit centre,' he said. 'Most private banks are part of a big bank and have to compete for treasury funds along with corporate and all the other departments.' Coutts has taken a two-year view of its push into Hong Kong and has recruited from around the world to ensure top quality staff. Mr Barber said: 'We have recruited 45 people and we will be doubling that over the next two years. People are the most important resource. It is our strategy to recruit quality people with proven track records and knowledge of the industry.' The bank has invested in technology with the development of a global on-line delivery system to keep account managers up to date. While the operation will take some time to become profitable, Coutts is off to a good start in terms of its reputation. Its parent, National Westminster Bank, is one of Britain's four clearing banks and among the 20 biggest banks in the world. Having the banker to the Queen as a client is another serious claim to respectability. 'Private banking comes down to relationships and building confidence,' Mr Barber said. 'You have to demonstrate first that the institution is secure and its credit rating stands up. Security is important in this part of the world. People like to deal with banks that are profitable.' One of Coutts' specialities is offshore banking, which centres around the arrangement and administration of trusts based in tax havens. 'Historically, it has been a major part of our business,' Mr Barber said. 'We are recognised as the largest and oldest in offshore banking. We have been in the Bahamas since the 1930s, for example.' Offshore banking is already big business in Hong Kong and it is expected to grow in popularity with clients' increasing need for asset protection and estate planning. Mr Barber said trusts could prove to be a legal mine field. Many which had been set up could be called into question by tax authorities around the world since they allowed excessive control by the settlor - the individual whose assets were put into the trust. Coutts' partner in its Hong Kong venture is the Commercial Bank of Hong Kong which Mr Barber said would add much value to the operation. 'Our joint venture partner is keen to get into private banking,' he said. 'They can provide domestic private banking products at more competitive prices than we can and we can provide the international side.' In line with most of the industry, Coutts requires a minimum net worth of about US$1 million (about HK$7.7 million) before taking on a private bank client. Unlike some of its competitors, Coutts does not believe the Hong Kong private banking scene is becoming too crowded. The bank believes there is about US$2.3 trillion of investment wealth available in the region.