Arbuthnot Latham had a good year in 2015. The UK-headquartered, boutique private bank, maintained healthy profit margins, set up new offices within the UK – beyond London, as well as grew its international business in Dubai – a unit that was launched in July 2013.
The new milestone in Arbuthnot Latham’s strategy roadmap is the establishment of its commercial banking focus, with the appoint-
ment of Steven Fletcher, the new head of commercial banking for the lender. The key focus is to ensure that the com-
mercial banking capabilities get off the ground and find success. "By combining focus through the private banking lens and the commercial banking lens we can offer a joined up service to an entrepreneur – covering both his/her private wealth and company’s wealth," says James Fleming, CEO, Arbuthnot Latham.
"We also have one of the teams that we envisage being part of that group that is focused towards media and entertainment, which is a specific highlight for us. We have seen positive traction in that sector," Fleming further explains.
A veteran in the private banking industry with over 25 years of experience, Fleming is well versed with the UK wealth market having
previously worked at Coutts and Societe Generale Private Banking Hambros. His plans with regards to Arbuthnot Latham in 2016 are to do "more of the same", aiming that it will bring the lender its desired results as it did in the year gone by.
In 2015, Arbuthnot Latham strengthened different offices within the UK with senior hires in Manchester, and also moving to a brand new location in the centre of Exeter at the beginning of September – as a "statement to the local market there".
Beyond the UK, it continued its growth trajectory in Dubai. "We only opened this office two and a half years ago but we have real momentum there in the local market and a rising profile. That rising profile comes back to the home centre here in London where we are opening new accounts on a regular basis for substantial high net worth (HNW) clients.
We have a good momentum of growth across the business," Fleming says. He additionally informs that despite the majority of Arbuthnot Latham’s clients in Dubain being expatriates, there is a growing local clientele that the bank is attracting as well.
However there are no plans of "chasing new geographies for the moment" for Arbuthnot. "Having invested in some offices, we want to see the returns and rewards come through, and the priority is to ensure the growth of business in those regions," he says.
Fleming’s outlook for 2016 is optimistic on the whole. "The economy got stronger in 2015 and that is always a good backdrop for private banking, particularly for entrepreneurs. Wealth creation is happening around us," he says. However there are also some apparent stresses that the industry is tackling. "We are seeing margin compression across the business, and you notice that in the results of some private banks. We have a rising cost environment. Be it the IT infrastructure or resourcing your risk and compliance departments to cater for the stronger regulatory environment – these are all factors that are contributing to the increasing costs and
Fleming’s mantra for remaining profitable is "careful management", which sounds much simpler than it is in practice. "Keeping an eye on all the metrics, ensuring that you are growing the business at a pace that you can maintain a continuous momentum in, and at the same time guaranteeing robust cost control whilst proving that you are balancing every aspect as well as investing in the futureof your business. It is a daily dynamic process," he says.
While the big banks across the private banking landscape are boasting the ability to ride out difficult cost environments with the advantage of scale and the ability to invest in delivering as well as maintaining the highest product and service levels, Fleming says that being a smaller player works to Arbuthnot Latham’s benefit.
"In the eyes of the client, there is a feeling that a smaller bank can truly offer bespoke services to the private client. There is a true relationship between the client and the institution and there is stability on the relationship management side, which is highly valued byclients. They want to see constancy. "A smaller institution also has a shorter line of decision making and is able to move, I think, in a more nimble manner, which is what clients want," says Fleming.
Arbuthnot Latham is also strengthening its millennial strategy by focusing on the transition of wealth between generations, "guiding and advising clients" as well as gaining access to the next generation of clients preceding that wealth. "Wealth succession is a constant subject in our business. It is our duty to bring to the attention of our clients how succession is part of the overall wealth planning exercise," says Fleming.
With the theme of technology disrupters and the rise of robo-advisors in the wealth management business continuing strongly in 2015, Fleming agrees that automated advisory services are making an increasing impact on the industry and its dynamics. "Technology solutions are enablers of relationships. But at the moment, there is no real substitute for face to face advice and the value of human relationships," he reiterates.