Profit before tax and exceptional items at Arbuthnot Latham, the private banking arm of UK-listed Arbuthnot Group was broadly unchanged at £0.3 million, (2005: £0.4 million). The bank did benefit, though, from client growth of 11 per cent, 18 per cent deposit growth, 11 per cent loan book growth. Investment management performance was strong, with average absolute returns of 12.7 per cent, 3.3 per cent ahead of the benchmark, according to a statement from the bank. Last year Arbuthnot Latham continued its transition into a full service private banking business by recruiting more client relationship managers and asset management expertise which had a negative impact on profits. According to the company, there is typically a lead-time of 12 to 18 months before client relationship managers make a positive profit contribution. "I am very pleased with the progress we have made in developing our private banking business at Arbuthnot Latham during 2006," John Reed, chief executive officer told WealthBriefing. "Another year of significant investment saw us complete our discretionary investment management offer, recruit several specialists in such fields as pensions, yacht financing and property as well as several new client relationship managers. Business volumes are starting to grow very strongly now and we expect to see some of the previous years investment bear fruit in terms of profitability in 2007." Plans for the extension of Arbuthnot Latham’s franchise have developed during the year with the development of its own offshore capability through the establishment of a bank in Switzerland. Hans-Rudolf Strasser has been appointed as chief executive and satisfactory discussions have been held with regulators in Switzerland and the UK. Applications are due to be made to the relevant regulatory bodies shortly and it is anticipated that trading will commence in the second half of 2007. The cost of this investment in 2007 is expected to be £0.7 million.