Acquisition of Everyday Loans by Secure Trust Bank

PRESS RELEASE

For immediate release

8th June 2012

Arbuthnot Banking Group PLC

Acquisition of Everyday Loans by Secure Trust Bank PLC

Arbuthnot Banking Group PLC ("Arbuthnot" or the "Group") today announces that its 75.5 per cent owned subsidiary Secure Trust Bank PLC ("STB") has acquired today 100 per cent of the shares in Everyday Loans Holdings Limited and its wholly owned subsidiaries, Everyday Loans Limited and Everyday Lending Limited (together, "EDL", "Everyday Loans" or the "Business"). EDL was controlled by Alchemy Partners Nominees Limited ("Alchemy"), and the EDL management team.

STB has acquired Everyday Loans for consideration of £1. Upon acquisition STB has immediately provided funding so that EDL can redeem the remaining circa £34 million of subordinated debt principally held by Alchemy. A further payment of up to a maximum of £1.5 million will be made to the management team of EDL in March 2013, subject to achieving certain performance targets.

The upfront cash payments and the additional regulatory capital requirements arising from the enlarged STB balance sheet will be funded from the Group's existing resources with additional regulatory capital requirements being satisfied by fair value adjustments arising from the transaction. STB has received all of the necessary regulatory approvals in relation to this transaction. STB will consolidate EDL for regulatory capital purposes.

Everyday Loans is a provider of unsecured loans to a customer base predominantly in lower income groups and operates through a national network of 25 offices where loans are originated, serviced and collected. The Business will continue to trade using the "Everyday Loans" brand.

Everyday Loans had a loan book of £63.9 million as at 31 December 2011 and generated underlying operating profits before tax and subordinated debt interest under UK GAAP of £4.6 million (£2.8 million under IFRS) for the year ended 31 December 2011 and an estimated £1.8 million (£1.2 million under IFRS) for the four months ended 30 April 2012. The difference between the IFRS and UK GAAP profits predominately relates to the timing of the recognition of origination fee income. EDL has significant brought forward tax losses which it will be able to utilise following the acquisition.

STB is providing EDL with a new loan facility of circa £37 million to refinance EDL's existing bank debt and to fund future loans. This will enable STB to utilise surplus deposits referred to in previous disclosures. The acquisition is expected to be earnings enhancing for STB and Arbuthnot in the current financial year.

Henry Angest, Chairman and Chief Executive of Arbuthnot Banking Group PLC, said:

"The acquisition of Everyday Loans by Secure Trust Bank is evidence of the opportunity that STB has to grow in the current environment. It represents an income and profit enhancing opportunity which will assist STB develop its distribution."

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