The tycoon behind Nectar loyalty cards has started a campaign to shame Coutts after the bank allegedly advised him to keep his money in savings bonds issued by AIG, the troubled American insurer.

Sir Keith Mills, who was a major cheerleader in London’s successful bid for the 2012 Olympics, has created a website as a rallying point for other well-heeled clients of the private bank to join him in pressuring it to pay compensation.

Sir Keith said he assumed that other Coutts customers, who range from the Queen to several England footballers, might have similar grievances against the Government-controlled bank.

He banked £160 million last year after selling LMG, the Nectar business, and he is thought to have a substantial sum tied up in AIG bonds.

His claim raises the politically charged prospect of some of the wealthiest people in the country applying for compensation from an organisation owned by Royal Bank of Scotland and therefore underwritten by taxpayers.

Coutts last night emphatically denied that it had mis-sold the bonds, AIG Life Premier Bonds, and said that it had made plain to Sir Keith and other customers that the bonds, though low-risk, were not risk-free.

A full-page advertisement due to appear inThe Times today, setting out Sir Keith’s allegations, was pulled last night on legal advice.

Well-to-do and rich British investors placed £5 billion in the AIG investment products, which took the form of single-premium life insurance bonds with a minimum investment of £100,000. As recently as September the bonds offered an interest rate of 6.5 per cent gross.

Many institutions sold the bonds to their clients including high street names such as Barclays, HSBC and UBS.

Coutts, according to Sir Keith, recommended that he buy the bonds as a safe alternative to bank deposits and allegedly told him that it had no concerns, even after AIG started to receive negative publicity.

Bondholders’ money was frozen in September as investors rushed to redeem their money in the wake of AIG’s well-publicised problems in America. Those attempting to take out their money now face losses of about 13½p in the pound.

AIG, once the world’s biggest insurer, was sunk by huge losses on credit insurance and in September was bailed out by the American Government with an $85 billion credit facility. It is now 80 per cent state-owned.

On his website, couttsaigaction-group.org, Sir Keith accused Coutts of recommending the bonds as a way of protecting his capital and called on other clients to join his ginger group.

Coutts is wholly owned by Royal Bank of Scotland, which is 58 per cent owned by the Government after it failed to raise rescue capital from its shareholders last month.

Coutts said that while it was very understanding of Sir Keith’s situation, the bonds were sold with the appropriate advice and it had complied with the Financial Services Authority rules: “At the time of sale it was made clear that the investment was low risk but not risk-free, and that the value of the investment could go up as well as down.”

The bank said that it was lobbying AIG on behalf of all its clients affected by the problem bonds to negotiate the best outcome for them. Clients needing instant cash were being offered loans of up to 100 per cent of the frozen funds at “competitive” interest rates.

Shares in RBS slumped by 8 per cent yesterday to 46½p amid growing speculation that the bank might need more capital in addition to the £20 billion already injected by the Government.

Ministers paid 65½p for the shares just three weeks ago, leaving them nursing paper losses of £4.4 billion at yesterday’s close.

Speculation is growing that RBS is considering much bigger job losses than the 3,000 cuts confirmed last month in the global markets division. McKinsey, the management consultant, is advising Stephen Hester, the new chief executive, as part of a strategic review into the bank.

As well as Nectar, Sir Keith founded the Air Miles loyalty card business before selling it to British Airways.

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