Chapter 4 of Running a Family Office Under $100M
Treasury is the plumbing of your wealth. Nobody brags about their banking setup at dinner. It's not interesting to talk about.
But get it wrong and everything else becomes harder. Or more expensive. Or both.
Most founders treat banking the way they did when they had £50,000 in the bank. One current account, maybe a savings account, a brokerage somewhere. That worked fine then. Once you have real money, it starts costing you.
The Banking Ladder
Not all banks offer the same things. And your access to services, products, even basic functionality depends on which tier you're in.
Retail is where everyone starts. Below roughly £250K, you get basic accounts, online banking, standard service. Fine for normal life. But retail banks don't offer certain products at all. You can't get a credit line secured against your investments at high street Barclays. You can't efficiently hold seven currencies at NatWest. The capabilities literally don't exist at that level.
Premier or Wealth kicks in around £250K–£1M. Lloyds Private Banking starts at £250,000 in investable assets or £250,000 annual income. Santander Select requires £500,000 plus £250,000 income. You get a "relationship manager," which sounds impressive but is often just a salesperson for the bank's products. Some genuine benefits though—better foreign exchange rates, faster service, access to the bank's investment products, some flexibility on accounts and lending. The catch is that your relationship manager's job is to sell you the bank's funds and services. They won't tell you when a competitor has something better.
Private Banking is the tier that matters once you're at £1M+. The thresholds vary:
- Coutts: £1M in investable assets or £3M in savings
- HSBC Private Banking: £2M+
- Barclays Private Bank: £5M+
- JP Morgan Private Bank: $10M (they raised this from $5M in 2021)
At this level: multi-currency accounts as standard. Lending against your portfolio. Access to alternative investments and private placements. Actual service where problems get solved and people answer phones. You're a meaningful client, not a number.
If you have £5M+ sitting in retail banking, you're leaving money on the table.
The most obvious cost is foreign exchange. Every time you convert currency, you pay a spread—the difference between the mid-market rate (what banks pay each other) and what they charge you.
At retail, that markup runs 1.5–3% on routine conversions. It can reach 4–6% during volatile periods or for less common currencies. At private banking, you're typically looking at 0.5–1%.
On a £1M conversion, that's the difference between paying £15,000–£30,000 versus £5,000–£10,000.
If you're moving money internationally with any regularity—investing in US funds, buying European property, receiving income in multiple currencies—retail FX spreads will cost you £15,000–£25,000+ annually. Just in friction. That's real money disappearing into the spread.
You don't have to wait until you hit exact thresholds to move up. Banks make exceptions for clients with clear growth trajectory. If you're at £3M but approaching a £15M exit, private banks will talk to you now. They want the relationship before the money arrives.
Cash: How Much and Where
Cash allocation seems simple. It isn't.
Hold too little and you're forced to sell investments at bad times. Miss opportunities because you can't move quickly. Face potential margin calls if you're using any leverage.
Hold too much and you're bleeding opportunity cost. Cash earning 4% while your portfolio could earn 8%+ means every excess pound costs you 4% annually. Over a decade, that adds up to real money.
The framework that works: think of cash in three buckets.
Operating cash covers day-to-day expenses and known near-term needs. Three to six months of expenses, sitting in your current account or instant access savings. This is money you might need next week.
Reserve cash is your buffer. Emergencies, unexpected needs, general cushion. Another six to twelve months of expenses. High-yield savings or money market. Not instant access, but available within days.
Opportunity cash is dry powder. Money you can deploy when something comes up—an investment opportunity, a co-invest that needs quick capital, a deal that won't wait. How much depends on your situation, but typically £500K–£2M for most founders in the £10–30M range.
Add those up and you're probably looking at 8–15% of liquid wealth in cash or near-cash. On £20M, that's £1.5–£3M. Sounds like a lot, but it buys you flexibility and removes the stress of forced selling.
Current environment actually makes this easier. Cash pays something again. As of December 2025, easy-access savings accounts pay up to 4.5% (Chase, for new customers), with one-year fixed rates around 4.1–4.4%. The Bank of England base rate sits at 3.75% following the December cut. Money market funds offer similar yields.
The opportunity cost of holding cash is much lower than when rates were near zero. But don't let decent yields become an excuse for holding too much. If your portfolio returns 8% and cash returns 4%, excess cash still costs you 4% annually.
One thing worth noting: the Financial Services Compensation Scheme limit increased from £85,000 to £120,000 per person, per institution from 1 December 2025. If you're holding significant cash across multiple accounts, check whether your banks share licences—HSBC and First Direct, for example, count as one institution for FSCS purposes.
The Tool Most Founders Don't Know About
Securities-based lending. This might be the most useful thing in this chapter.
The concept is simple. You borrow money from your bank or broker, using your investment portfolio as collateral. The loan is secured against your holdings—stocks, bonds, funds, sometimes alternatives.
Why would you do this? Because it lets you access liquidity without selling appreciated assets.
Say you need £2M for a property purchase. You have two options.
Option A: Sell investments. You sell £2M in stock that's appreciated significantly. Pay roughly £480K in capital gains tax (assuming 24% rate on £2M in gains—the current UK rate following the October 2024 increase). But wait—you needed £2M cash, and you just paid £480K in tax. So you actually need to sell about £2.6M to end up with £2M after tax. You've now liquidated £2.6M, paid nearly £500K in tax, and lost the future appreciation on everything you sold.
Option B: Borrow against portfolio. You borrow £2M at 6.5% interest, secured against your holdings. Annual interest cost: £130K. Your portfolio stays fully invested. No tax triggered. If your portfolio returns 8%, it earns significant returns on the assets you didn't sell. Meanwhile you've paid interest that may be tax-deductible depending on what you use the funds for.
Over a five-year horizon, Option B often keeps you hundreds of thousands ahead. Sometimes over a million. The maths varies based on your tax situation, interest rates, and investment returns—but the principle holds. Selling triggers tax. Borrowing doesn't.
This is how wealthy people stay invested while still accessing capital for property, business opportunities, or major purchases. It's not exotic or risky. It's just using the right tool.
The mechanics: most private banks offer this. The rates vary significantly:
- Major US brokers (December 2025): Charles Schwab charges a 10.00% base rate, Morgan Stanley 9.95%, Vanguard 9.50%
- Interactive Brokers: 5.8–6.8% for USD loans, significantly lower than traditional brokers—they're consistently rated as having the lowest margin rates in the industry
- UK private banks: typically negotiate based on relationship size, often in the 5.5–8% range for significant portfolios
- GBP loans at Interactive Brokers: 5.6–6.6%
Advance rates typically run 50–70% of portfolio value, meaning you can borrow up to that percentage of your holdings. Repayment is flexible—interest-only, no fixed schedule, pay down when you want.
The risk to understand: margin calls. If your portfolio drops significantly, the bank may require you to add collateral or repay part of the loan. They can sell your assets to cover if you don't. This is the scenario that blows people up—borrowing too aggressively, market drops 40%, forced to sell at the bottom.
Size your borrowing conservatively. Stay well below the maximum advance rate. If the bank offers 60%, maybe use 30–40%. Don't borrow for speculation. And don't borrow if a market drop would put you in a position where you'd be forced to sell.
But used sensibly, this is one of the most powerful tools available. Set up the facility before you need it—paperwork takes time, credit approval is required. Better to have the option and not use it than need it and not have it.
Your Private Banker Works for the Bank
Let me be direct about something. Your private banker is not your advisor. They work for the bank.
This isn't criticism—it's just reality. And over the years I have met some genuinely good private bankers. But understanding it helps you use the relationship properly.
Your banker will:
- Facilitate services the bank offers
- Provide access to the bank's products
- Connect you with specialists
- Be responsive when you need things done
- Remember your birthday
Your banker will not:
- Tell you when a competitor has better rates
- Recommend against the bank's high-fee funds
- Suggest you take your lending elsewhere
- Proactively move you to lower-cost alternatives
Use them for execution and service. Moving money, setting up accounts, solving problems. Access to products you've independently decided you want. Credit facilities and lending. Multi-currency capabilities.
Don't rely on them for independent investment advice or comparison shopping across providers.
Consider having two or three banking relationships. Primary bank gets 60–70% of assets and handles most services. Secondary relationship gives you a backup, a comparison point, and leverage in negotiations. "Bank X offered me better rates on this" is a real conversation you can have.
Multiple relationships also protect you if something goes wrong with one bank. Banker leaves, bank changes policy, fraud issue freezes accounts—if everything is in one place, you're stuck. Redundancy has value.
And yes, you can negotiate. Private banking fees, FX rates, lending terms—these aren't fixed. What gives you leverage: total relationship size, consolidated assets, willingness to move. Being a good client helps too. Responsive, organised, not constantly demanding. A 20–30% improvement on various fees is often achievable if you ask.
Mistakes That Cost Money
Leaving large sums in retail accounts. The founder with £8M still spread across NatWest, Barclays, and a Hargreaves Lansdown GIA. Paying retail FX spreads (1.5–3% vs 0.5–1%), earning suboptimal interest, no access to proper lending. Consolidate into a real private banking relationship.
Cash as a permanent allocation. Some founders get comfortable with cash, especially after exit. It feels safe. The balance doesn't fluctuate. But £5M in cash losing 3% annually to inflation while missing 8% returns is a £550K+ annual cost. Define a cash allocation appropriate to your actual needs. Invest the rest.
Ignoring FX costs. Moving money internationally without attention to rates. Accepting whatever the bank shows on the app. For significant conversions—£100K+—get competitive quotes. Use the FX desk, not the retail interface. Consider specialist providers like Wise for mid-market rates on smaller amounts.
No lending facility in place. Waiting until you need liquidity to explore borrowing options. Then discovering it takes weeks to set up, or the terms are unfavourable because you're rushing. Establish the facility when you set up private banking. You may not use it for years. When you need it, it's there.
Over-leveraging. The opposite mistake. Drawing 60% against a concentrated portfolio. Market drops, margin call hits, forced to sell at the bottom. Size borrowing conservatively. Don't borrow for speculation. Stress-test what happens if markets drop 30%.
Single banking relationship. Everything with one bank. Then something goes wrong and you're stuck. Maintain at least one secondary relationship, even if small.
What This Looks Like at Different Levels
£5–10M: One private banking relationship (Coutts or equivalent), possibly one retail account for convenience. Cash position around £1–1.5M. Establish a securities-based lending facility even if you don't use it. Multi-currency if you need it for investments.
£10–30M: Primary private bank plus secondary relationship. Cash around £2–3M. Active use of lending for tax efficiency and major purchases. Multi-currency standard.
£30–50M: Primary international private bank plus one or two secondary relationships. Cash £3–5M. Lending as a strategic tool with multiple facilities available.
Treasury isn't glamorous. But like actual plumbing, you don't think about it when it works—and everything stops when it doesn't.
Get the basics right: banking at the appropriate tier, cash sized for your actual needs, lending facilities in place before you need them, FX costs under control. It compounds quietly. The founder who gets this right pays less in friction, has more flexibility, and keeps more money working.
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