Arbuthnot Regulatory News (ARBB)

14 June 2016

ARBUTHNOT ANNOUNCES AWARD OF PHANTOM SHARE OPTIONS AND SETTLEMENT OF EXISTING OPTIONS UNDER PREVIOUS SHARE OPTION SCHEME

Arbuthnot Banking Group PLC announces that it has today granted phantom options over its ordinary shares of one pence each ("Ordinary Shares", each an "Ordinary Share") under a new seven year incentive scheme to Andrew Salmon, James Cobb, and Ian Henderson, all directors of the Company ("2016 Scheme"). Mr Salmon has been granted phantom options relating to 200,000 Ordinary Shares and each of Mr Cobb and Mr Henderson has been granted phantom options relating to 100,000 Ordinary Shares. The grant of the phantom options is treated as a dealing by a director under the AIM Rules for Companies by way of the acquisition by the director of a related financial product referenced to Ordinary Shares in the Company.

The value of each phantom option is related to the market price of an Ordinary Share. The initial value of each Ordinary Share for the purposes of the phantom options is 1591 pence (being the mid-market share price at close of business on 14 June 2016). An increase in the value of an Ordinary Share over 1591 pence will give rise to an entitlement to a cash payment by the Company on the exercise of a phantom option.

The right to exercise phantom options is subject to the satisfaction of performance conditions.

50% of each director's individual holding of phantom options is exercisable at any time after 15 June 2019 and the other 50% of each director's individual holding of phantom options is exercisable at any time after 15 June 2021.

The new incentive scheme and the exercise of phantom options granted under it will not result in any new Ordinary Shares being issued by the Company. This new incentive scheme is intended to replace the 1995 Unapproved Share Option Scheme amended and approved by shareholders at the Annual General Meeting in May 2006 ("2006 Scheme") and the Unapproved Share Option Scheme approved by shareholders at the Annual General Meeting in May 2015 ("2015 Scheme").

With regard to the 2006 Scheme, the Company today agreed with Mr Salmon to cancel his right to exercise options to subscribe for 100,000 Ordinary Shares under that Scheme in consideration of the payment by the Company to Mr Salmon of an amount per Ordinary Share equalling the difference between 930 pence, the option price specified at the date of grant of the options pursuant to the 2006 Scheme ("Option Price"), and 1591 pence, being the mid-market share price of an Ordinary Share at close of business on 14 June 2016 ("Market Price").

The Company further agreed with Mr Cobb to cancel his right to exercise options to subscribe for 50,000 Ordinary Shares pursuant to the 2006 Scheme in consideration of the payment by the Company to Mr Cobb of an amount per Ordinary Share equalling the difference between the Option Price and the Market Price.

The aforementioned options had been granted to Mr Salmon and Mr Cobb on 16 April 2013 pursuant to the 2006 Scheme, with each of Mr Salmon and Mr Cobb having the right to exercise their subscription rights in relation to the 2006 Scheme at any time between April 2016 and April 2021.

Further to the exercise of Mr Salmon and Mr Cobb's options, neither Mr Salmon nor Mr Cobb has any further interest in the 2006 Option Scheme or the 2015 Scheme. There remains one interest in the 2006 Scheme for 50,000 Ordinary Shares which such interest is exercisable between April 2017 and April 2022. There are no existing interests in the 2015 Scheme.

-ENDS-