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Wealth Manager: How Arbuthnot went from banking's best kept secret to sector darling

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by David Campbell on Mar 07, 2013 at 00:01

You know the modern archetype of a banker: someone exchanging all-lads-together banter with colleagues, while openly and fraudulently distorting financial markets? Plundering public coffers when it’s a matter of their own survival, then flicking a middle finger at public opinion?

Well, James Fleming, chief executive at Arbuthnot Latham, is the exact inverse of that archetype.

Even allowing for the fact he hails from a considerably more genteel branch of the industry than the rough and ready, testosterone-driven world of investment banking (having come up through SG Hambros before more recently working as managing director of the international team at Coutts), he is by a wide margin more self-effacing, engaging and personable than is usual at his level of seniority.

Possibly self-effacing to a fault – part of the pre-interview negotiation is a stipulation that any profile focuses on the business, which he joined last year, over his personality.

But that in itself could be construed as an exercise in brand extension: Arbuthnot Latham’s parent company, the Arbuthnot Group, has become a UK bank that it is okay to love.

‘We don’t build investment products, which is a strong selling point for clients,’ says Fleming. ‘We are still deposit-financed and we have a [lending] limit of 70% of our deposit base. The 30% not lent out is deposited with the Bank of England. We are not dependent on the wholesale [funding] markets in any way.’

Popular with clients, and also with equity markets. Since the beginning of 2012, shares in Arbuthnot Banking Group have climbed 155% from 337p to 860p, compared with a 51% rise by the FTSE UK Financials index over the same period.

 

That was boosted by the listing of 25% of the company’s retail-focused Secure Trust Bank on AIM, which is arguably where the greater growth potential is located, and which has seen its shares rise 128% to £17.25 since listing in November 2011.

Both Fleming and his press team go to some pains to stress the operational separation of the two divisions, with the former describing them as ‘almost at opposite ends of the banking spectrum’, but well-regarded UK equity managers have also been generous in their praise of the group as a whole.

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