Exclusive Interview: Arbuthnot Latham's New CEO James Fleming

Tom Burroughes

28 May 2012

Every bank wants to stress these days how careful it is with its balance sheet. At the UK’s Arbuthnot Latham, this conservative approach has been part of this private bank’s DNA since the start, the firm says.

But caution should not be confused with standing still, argues the recently appointed James Fleming, a former Coutts man who took over at the private bank three months ago, replacing Dean Proctor as the private bank’s chief executive.

Proctor, who had been in the post for three years, had worked hard to create a three-pronged service offering at the bank (traditional bank services, investment management and wealth planning), left in place a structure that Fleming is determined to develop.

So how was the New Boy settling in? This publication recently caught up with Fleming at Arbuthnot Latham’s offices in the City.

“That is something I am looking to grow in the next few years. The ability to have a seamless connection between banking, structuring of assets and long term planning is important….it’s very integrated here,” Fleming said.

“There has been a steady flow of new clients coming in….they are taking up a range of our services, not just purely for banking,” he said.

Stronger results

Recent results have been encouraging. As reported on 16 March, Arbuthnot reported a profit before tax of £2 million (around $3.13 million) in private banking for 2011, twice as much as in the previous year. The firm also said that operating income at its private banking arm rose to £17.7 million from £14.4 million in 2010.

Meanwhile, Arbuthnot Banking Group, the private bank’s parent firm, has sold its Swiss subsidiary to Zurich-based Ducartis Holding for SFr2.0 million (around $2.1 million) only a couple of years after buying it. Arbuthnot has said it will use the proceeds of the sale to develop its existing private and retail banking operations in the UK.

In the past three months, Fleming has developed thoughts about how best to take the firm forward. He brings international experience: In his previous role, Fleming was managing director of Coutts’ UK entrepreneurs, landowners and inpatriates client group and was a member of the UK management committee. But while banking is clearly in his blood, the industry does not dominate his life; this man is a keen sportsman, particularly in the world of cricket.

Like his predecessors, Fleming stressed how the bank does not engage in proprietary trading and has a conservative funding policy. “We raise deposits, lend the money out and retain a surplus largely with the Bank of England,” he said.

“A common theme is around service. Arbuthnot Latham has picked up a lot of clients around disaffection with big brands. The type of clients coming to us….have been around delivering service or the lack of it in their previous relationships.”

Arbuthnot Latham’s long history – around 180 years, means this is a bank that has survived wars, depressions and other forms of turmoil, a fact that has obvious appeal to clients concerned about the current volatile economic climate.

The ownership structure of the bank is transparent; there is a “good deal of stability” at the bank.

“As point in the eyes of a client, this all gives a great deal of strength and comfort,” Fleming said.

Spreading risks

“Diversification of risk is high on the agenda,” he said.

“The wealthier clients should have their assets based across two or three houses. I don’t think you need any more than that. You want to become the lead banker in that relationship,” Fleming continued.

Talk about how Arbuthnot Latham finds new clients led conversation to the topic of forging strong networks. And this raised the issue of the bank’s historic connections to the world of motor racing. The bank is sponsor of the Historic Grand Prix Cars Association.

“It’s a class example of how to network in a community where there is clearly wealth…in that sense it has been very effective,” he said. Evidence of Arbuthnot Latham’s motor racing involvement is everywhere: the room in which Fleming spoke had photographs of classic motor cars and books recounting the deeds of such greats as Jimmy Clark and Ascari.

Besides such networks, Fleming stressed that London’s City financial community is a natural source of client, even if some of the boom times have faded, at least for now. “The pace of wealth creation in the City might be less than in the past 10 to 15 years, but there are still plenty of opportunities there.”

Arbuthnot Latham is not a purely London bank. It has a regional UK presence with an office in Exeter, tapping the wealth in the southwest of the UK. “I would be looking to grow that further in the next couple of years.”

“Certainly we are a UK-focused institution. There is an international ambition here,” he said, referring to his own background in the international wealth management sphere.

But whatever happens, one senses that this is not a bank that plans any dramatic changes. A conservative stance has served it well so far.