Butterfield Bank is looking to cash in on a boom in the London property market and gain a larger share of borrowers’ asset management and banking business.The Bermuda bank’s UK operation is among a growing number of foreign private banks entering the London mortgage market by offering home loans in excess of £1 million.And according to a report this week in the Financial Times, these private banks are now beginning to change their lending criteria and are “focusing on establishing long-term asset-based relationships with clients who take out mortgages after finding that many borrowers have failed to use their other wealth management services”.“A growing number of wealth managers now require clients to transfer cash or assets to them as soon as accounts are opened to secure cheaper home loans, while others include a clause saying the interest rate will rise after six or 12 months if the promised cash or investments have not been deposited,” the FT report said.“The strong growth in the prime central London property market, fuelled by demand from rich foreign buyers seeking a haven for their wealth, has led to an increase in the number of private banks offering competitive rates for £1 million-plus mortgages.Average prices for prime London properties have reportedly jumped more than 20 percent in the last five years.“The increased appetite for trophy homes in Knightsbridge, Belgravia, Kensington and Mayfair led several private banks, including JPMorgan and Standard Chartered, to gain regulatory approval to lend on residential property in 2010,” the FT article said.“It has also led to the growing emergence of niche foreign private banks in the multimillion pound mortgage market, ranging from SEB of Sweden to EFG of Switzerland, and Butterfield, a private bank established in Bermuda.“However, while private banks hoped that providing mortgages would open the door to a larger share of the client’s asset management and banking business, this has often not been the case. As a result, private banks are becoming stricter about what mortgage terms they will offer. Some banks will now only offer short-term loans of 12 or 24 months and refuse to renew them if the borrower has not transferred assets by the end of that period.“Butterfield Private Bank recently changed its lending criteria to stipulate that a relationship manager must attend an initial client meeting along with a mortgage specialist.”The FT articles quotes Raymond Sykes, managing director of Butterfield Private Bank, as saying its objective is to develop an “ongoing, close, long-term relationship” with its clients.“In recent months, we have been able to help a number of wealthy individuals secure mortgages in excess of £1 million,” he said. “We are increasingly finding this involves the provision of a broader financial solution that satisfies the individual client’s specific needs.”In an interview last week, Butterfield’s new executive chairman Brendan McDonagh told The Royal Gazette said the provision of wealth management services “was considered a core Butterfield competency and area of ongoing growth”.The FT said the changes are part of a recent trend by private banks to move away from having a debt-only relationship with clients.“Ian Ewart, head of products, services and marketing at Coutts, agrees that it does not want to have a mortgage-only relationship with its clients,” the FT article said. “Coutts has repositioned its strategy recently. [We are] positioning ourselves more as a wealth manager rather than just a private bank.”Last year Coutts altered its criteria and it now requires clients to have at least £1 million in investment assets compared with a previous requirement of £500,000.And ABN Amro Private Banking is another private bank that requires new mortgage clients to transfer assets to it.