Adam & Co profits buck banking gloom

Published on Saturday 25 April 2009 15:27

PRIVATE bank Adam & Company has grown its profits and lending book despite the downturn and the troubles of its parent group Royal Bank of Scotland.

The Edinburgh-headquartered bank increased its pre-tax profit to 24.3m last year, up 17%, and boosted its lending book by almost 30%.

David Cathie, managing director of Adam & Co, says there has been a steady growth across the business, which includes banking, investment management and investment administration for other private client fund managers.

"We've won new clients and gained more business from existing clients. For example, the change in capital gains tax last year led to some businesses selling up to release cash to invest. This helped us," he said.

He added that Adam & Co has gained new customers from clients whose existing banking relationships have come under strain during the recession. But it turned away a number of opportunities that did not fit its risk appetite in the downturn.

He admitted that the investment management side of the business had a tough year because of the turmoil in stock markets. Its funds under management fell 9%.

Although RBS also has Coutts private bank under its umbrella, Cathie is confident there is a place for Adam & Co within the group which is being rebuilt by new chief executive Stephen Hester. Adam & Co sits within the wealth management division, which Hester sees as a core business.

Cathie said: "Stephen Hester has a good understanding of the bank. He has a very open style of communication and has given us regular updates. His challenge, and all our challenge, is to restore the good reputation of the group."

Despite Adam & Co having a separate board of directors and being run as an autonomous business with its own banking licence, Cathie says there is no desire for it to break away from RBS. "The days of small independent banks are gone. We're very happy to be part of RBS group. But it's for them to decide," he said.

Adam & Co kept its costs flat last year but its net charge for impairment provisions increased from 870,000 to 3,765,000, impacted by falls in the property market.

It is currently carrying out a staff consultation exercise to make sure the bank is "as efficient as possible in a very difficult market". Although Cathie does not rule out job losses, he says he is satisfied there will be "no dramatic outcome" when the process finishes in a few weeks. He says all 375 employees have been kept informed through the consultation.

He said: "Like any business, we've been looking at our costs in the last few months. The market has changed."