Private banks hit by this year’s erosion of revenue, and trust, must quickly adapt to meet new demands from clients, politicians and regulators in 2010, says a new study by management consultancy firm Booz and Company.

On top of declining revenues, the UK wealth industry now faces an uncertain tax environment and strict regulatory measures.

Yet according to the survey of 20 managers - including institutions such as Barclays Wealth, Coutts and HSBC Private Bank -  the biggest struggle for private banks will be to forge a new deal with its clients, not just to prevent them moving firms, but to stop clients leaving the UK altogether.

“Changing tax regulations and future tax uncertainty is unsettling high net worth individuals based in the UK leading them to reconsider London as their domicile,” said Booz and Co in a statement.

However, one reason for optimism, at least for onshore businesses, could be the ongoing plight of offshore jurisdictions. According to the consultancy, G20 scrutiny on offshore banking, combined with tax amnesties, may lead UK high net worth individuals to return funds to the UK.

Ultimately, says Alan Gemes, senior vice-president at Booz & Co, private banks must ensure their clients feel valued and feel they are getting more value from their bank. This will include better pairing of clients and relationship managers, as well as rigorous risk profiling.

“Private banks that are able to align their value proposition to the changing needs of private clients, structurally change their cost base and address the onshore / declared offshore issue stand to gain the most…there is a tremendous opportunity to strengthen London’s position as one of the world’s leading private banking centres,” said Mr Gemes.