UK-based private bank Arbuthnot Latham has a particular interest in serving high net worth motorsport and horse-racing enthusiasts. Chief executive Dean Proctor outlines to Maryrose Fison his vision providing selected portfolio models, known as collectives, to the bank’s carefully cultivated client set.
Not many private banks can boast a specialist motor sports team with bankers who hold race licences, but for British bank Arbuthnot Latham catering to the needs of its driven clients, whether in the pit stop or the office, is all just part of a normal day’s work.
Between 10 and 15% of its 3,000-strong high net worth (HNW) client base comprise members of the Historic Grand Prix Cars Association.
Chief executive Dean Proctor, who celebrated his one year anniversary at the helm last month, says this long-standing partnership has proved a magnet for prospective clients on the hunt for a traditional private banking service.
“The number of people who have an interest in historic cars is substantial,” Proctor says.
“The whole of the private banker’s portfolio is very much geared towards looking after that community of people, so they are embedded within the community and there is a lot of overlap between the clients that they look after.”
It is these bonds that have set Arbuthnot Latham apart from its competitors, Proctor says.
Proctor refocuses wealth strategy
They have also underpinned Proctor’s strategic decision-making since taking up his post in November 2009, following stints as managing director of wealth management and retail banking for Citibank and Egg.
“I needed to reorganise the business in terms of the types of client segments we want to achieve and the business we want to be,” he explains.
“I also took the opportunity to take a good look at the type of people that we have on the team given that strategy. We have changed the workforce by about 35% in the first year in order to have the right people and talent to align with the strategic direction we are moving towards.”
The bank historically offered its clients the option of a direct equities service akin to traditional stock broking on top of a range of model portfolios, often referred to as “collectives”.
But Proctor says Arbuthnot’s size would be better suited to a single–stranded approach offering collectives exclusively.
“Any small business the size of ours has to determine which route it wants to go down,” he explains. “I felt we should focus on fewer things and do them excellently, rather than trying to be Coutts, when we are clearly not of that size and are not capable of offering all of those products and services.”
Model portfolio service
“I made the decision we would focus on what I think is more appropriate and modern for our HNW client base, and we have gone down the route of offering our clients a collectives model portfolio service.”
The transition to a collectives-only model began at the tail end of last year and is expected to be completed by the end of spring 2011. Only clients with £1m ($1.6m) or more in investable assets, will have access to the traditional stock broking service.
The bank’s latest results suggest the single-stranded approach towards wealth management has appeal. Its third quarter results for 2010 showed private banking continued to expand both sides of the balance sheet.
The private bank has £600m in assets under management, customer asset balances grew 7%, with loan to deposit ratios standing at about 60%.
Eyeing up opportunities to expand
The group has a steady track record of retaining and growing its client base and while some newly appointed chief executives are intent on pushing to boost assets, Proctor has taken a more measured approach to client accumulation.
“If you were to say to me, do I want the 3,000 existing clients to become 30,000, I would say the answer is absolutely not,” he explains. “Because at that point, operationally, we would have a different business and I don’t think we would deliver the great intimate client service that we do.”
He does however have realistic growth targets and expects to attract more HNW individuals over the coming months.
“Do I want the 3,000 [existing client base] to become 5,000 over the next three years? That would be a delight, as long as they are all the right type of clients we are best able to serve to the high standards we pride ourselves on,” he says.
Joint ventures or acquisitions?
Over the next two or three years, Proctor is considering alternative methods to speed up the growth process.
“I would hope I would be able to speed up the growth process, whether that be through acquisition or joint venture or anything else that would allow us to speed up the process,” he adds.
“Because, if we were to do this all purely organically then the journey to some of the milestones [will] clearly [be] a much longer one.”