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.
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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.
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By GlobalData“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.”
