Secure Trust Bank Regulatory News (STB)

For Immediate Release

PRESS RELEASE 10 January 2012

 ARBUTHNOT BANKING GROUP PLC

PRE-CLOSE STATEMENT

Overall 2011 has been a successful year for Arbuthnot Banking Group PLC ("ABG" or the "Group"). The economic and business environment remained difficult in 2011 but ABG has taken some major steps, creating significant value for shareholders and positioning the Group to enable it to take advantage of the opportunities that are currently available.

The two most important events during the year were the IPO of Secure Trust Bank PLC ("STB") and the sale of Arbuthnot Securities Limited ("ASL").

The Group's capital position has been further strengthened by the IPO of STB. Arbuthnot Latham and STB remain highly liquid and both banks are continuing to grow their balance sheet and fee income.

The sale of ASL requires regulatory approval before it can be completed and this was not received before the year end. The results will therefore, include approximately £8 million trading losses for the year and £3.5 million of provisions in respect of the costs of an employee share scheme but will exclude the final loss on sale which is expected to be approximately £1 million. ASL's results for the year will be reported as discontinued operations.

STB continues to work on significant organic and external business opportunities. However, in respect of the consumer finance joint venture previously mentioned by ABG, despite exhaustive efforts we have been unable to agree a structure which meets the regulatory requirements and falls within our risk appetite; consequently the joint venture will not be proceeding as expected. As a result anticipated income associated with the joint venture has not been received and some extra costs associated with carrying excess deposits have been incurred. 

Accordingly, ABG expects profits before tax in 2011 for the continuing operations to be around £5.0 million. In addition ABG expects to record in its profit and loss reserves a gain on the sale of the shares in STB of approximately £16.5 million.

STB is also making a pre close statement today which should be read in conjunction with this statement.

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

Notes to editors:

Arbuthnot Banking Group consists of three main subsidiaries providing banking services to a wide cross-section of clients.

Arbuthnot Latham is the private banking and wealth management arm of the group. It provides banking, financial planning and investment management services to clients.

The group also has a full-service, integrated investment bank, Arbuthnot Securities, which offers a full range of institutional stockbroking and corporate advisory services and is focused on UK growth companies.

The retail banking arm of the group is Secure Trust Bank. Secure Trust Bank provides a wide scope of services to customers including personal loans, current and savings accounts and financial advice.