Arbuthnot Regulatory News (ARBB)

For Immediate Release

PRESS RELEASE 18 November 2011

 ARBUTHNOT BANKING GROUP PLC

ANNOUNCEMENT RE ARBUTHNOT SECURITIES LIMITED

Further to the announcement made by Arbuthnot Banking Group PLC ("Arbuthnot" or "the Group") on 9 November 2011 regarding Arbuthnot Securities Limited ("Arbuthnot Securities"), Arbuthnot today announces that it has entered into a conditional contract to sell its investment banking division, Arbuthnot Securities, to Westhouse Holdings PLC ("Westhouse"). The sale remains subject to regulatory approval.

In the year to 31 December 2010 Arbuthnot Securities made a profit before tax of £1.0m and for the six months to 30 June 2011 it reported a pre-tax loss of £3.4m. Westhouse has agreed to buy Arbuthnot Securities together with its outstanding subordinated loan of £1.5m for a total of £1.9m. It has also been agreed that, when utilised, Arbuthnot will receive 75 per cent. of a £1.9m deferred tax asset which Westhouse will acquire with the business. The total consideration including the deferred tax asset represents a £1.2m discount to the aggregate of the £3.0m of the approximate unaudited net assets of Arbuthnot Securities as at 31 October 2011 and the £1.5m subordinated loan.

The balance sheet effect of the transaction for Arbuthnot will be a reduction in net assets of £4.4m. This will include the cost of closing a Long Term Incentive Plan ("LTIP") set up for employees of Arbuthnot Securities and does not include any benefit from deferred consideration resulting from the deferred tax asset. Arbuthnot's regulatory capital requirement is expected to be reduced by approximately £3.3m as it will no longer need to hold capital for an investment banking business.

The upfront consideration payable by Westhouse will consist of £1.0m in cash, 1.25m Westhouse shares (resulting in Arbuthnot owning 9.37% of the enlarged share capital) and £350,000 of convertible loan notes. Arbuthnot has agreed to retain its shareholding in Westhouse for a minimum of 12 months.

Enquiries:

Arbuthnot Banking Group PLC Tel: 020 7012 2400

Henry Angest, Chairman and Chief Executive

Andrew Salmon, Chief Operating Officer

James Cobb, Group Finance Director

David Marshall, Director of Communications

Hawkpoint Partners Limited (Nominated Adviser) Tel: 020 7665 4500

Lawrence Guthrie

Numis Securities Limited Tel: 020 7260 1000

Christopher Wilkinson

Mark Lander

Pelham Bell Pottinger Tel: 020 7861 3232

Ben Woodford

Dan de Belder

Hawkpoint Partners Limited, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting as nominated adviser to Arbuthnot Banking Group PLC and is acting for no-one else in connection with the sale of Arbuthnot Securities Limited and will not be responsible to anyone other than Arbuthnot Banking Group PLC providing the protections afforded to clients of Hawkpoint Partners Limited nor for providing advice in connection with the sale of Arbuthnot Securities Limited or any other matter referred to herein.