THE regulator’s decision to grant a banking licence to fledgling lender Scoban has put winds in the sails of a major related capital-raising exercise, so it is little wonder that chairman Ray Entwistle is a happy man.
Last week’s decision by the Prudential Regulation Authority (PRA), subject to agreed capital requirements, has set Scoban fair to open its private bank in Edinburgh’s Charlotte Square and London’s St James’s by the autumn, he says.
“There’s an excitement in the air,” says Entwistle, a veteran of the Scottish financial and civic community.
“We have had meetings with investors over months, but the issue has always been the licence. There is naturally some sense of disbelief that people will get a new banking licence until it actually happens.
“The difference seems to have been a change of attitude, when the new Financial Conduct Authority and PRA took over from the old Financial Services Authority (FSA) last year.
“The FSA were saying they were “mindful” to approve a licence subject to a lengthy list of conditions. But “mindful” doesn’t mean much.”
Entwistle is far too discreet an operator to venture the opinion himself; but one senses he doesn’t violently disagree with those who believe the FSA was loath to take too many decisions in the wake of the banking debacle of 2008 and that regulator’s subsequent lengthy rundown.
Scoban, which will be a private bank for an overwhelmingly affluent customer base, has said it wants to raise £40 million to satisfy pent-up lending demand of about £50m to £60m.
Of the money raised, it is planned £4m will come from existing Scoban investors, believed to include one of Scotland’s billionaire businessmen, Alastair Salvesen, of the Christian Salvesen shipping empire.
The other £36m will come from blue-chip institutional investors and wealth managers. Entwistle says: “We have not got to raise this money to open our doors.
“It is what we believe we need in order to deal with levels of demand. We are also in very serious discussions with a wealth management organisation that wants to have a serious distribution agreement with us.
“It is not difficult to see a wealth manager thinking that an investment in a private bank could be an interesting strategic move.”
Entwistle says Scoban will be all about discreet, bespoke banking for affluent people, rather than the “faceless” pushing of product. It is also why the bank has set relatively modest targets. He is not expecting Scoban to be profitable for two and a half years, and projecting currently historically low interest rates to be no higher than 3 per cent five years down the track.
“The culture at Scoban has to be about putting the customer first,” he says. “We aim to look after nice people, developing a close relationship with them and their needs. The deal has to be that there’s an understanding with them that we have to make a profit from the relationship but it does not have to be every year. We shake hands on it.”
Scoban is aiming to have 6,000 clients five years after opening its doors. “But that represents only 0.4 per cent of the very affluent and wealthy in the UK so it is hardly dealing with the whole market,” Entwistle says.
The Scoban chairman says the bank will have 40 people in its Charlotte Square head office and about eight or nine in London.
The bank made a point of taking on four young people as trainee bankers – a policy Entwistle says will continue. He said he would be very pleased if Scoban had between 15 and 20 of such workers in three years time.
“They don’t have to be graduates. They just need to be kids who want to try and learn. I have been a banker all my life and now I’m an entrepreneur. And entrepreneurs in the UK should appoint young people. We owe it to them.”
He believes the bulk of the business will come, initially at the least, from London and the south east of England “because the balance of wealth in is London and the Home Counties”.
It is clear Entwistle is immensely proud of the Scoban banking team, several of them from the Adam & Co private bank where he himself worked from 1984 to 2009.
That includes Graeme Hartop, managing director of Scoban, who left Adam & Co to help set up Scottish Widows Bank in 1994.
“Graeme will be the public face of Scoban when we are up and running. He has been absolutely first-class since he joined us (in January 2013). He has already taken a huge level of responsibility,” Entwistle added.
“If he had not run Scottish Widows Bank extremely well Lloyds would probably have closed it down when they took over the Scottish Widows parent company (in 2009). But it was very profitable as he successfully built up both the lending and deposits sides. Graeme is also very well respected in the community.”
Entwistle negotiated the sale of Adam & Co to Royal Bank of Scotland in 1993. With hopefully good omens for Scoban, Adam & Co increased profits every year from 1993 to 2004 when he retired as managing director and became chairman of Adam & Co. The company continued to improve profits through to his retirement at the end of 2010.
The self-described “gregarious” Scoban chairman will no doubt continue to be seen on the business, as well as wider arts and civic scene in Scotland. “I have always been interested in the arts world,” he says.
Entwistle was chairman of the Scottish Civic Trust from 2006 to 2013. For six years from 2002, he was also a member of the fundraising committee, along with former Royal Bank of Scotland boss Sir George Mathewson, for a new bio-diversity centre at the Royal Botanic Garden in Edinburgh.
Perhaps most satisfying, Entwistle was asked by the Scottish Arts Council to become chairman of the struggling Fruitmarket Gallery in Scotland’s capital when the contemporary art gallery was haemorrhaging cash in the late 1980s.
“We cleared £250,000 of debt and got the gallery on its feet again. Now it’s thriving,” he says.
Why this pro bono publico interest? The answer seems to hang together with why Scoban is keen to employ the younger generation as well as its substantial doyens of banking expertise.
“I believe that in terms of our historic environment it is very important for us and the next generation as well for us to do our bit. I’m attracted by that,” Entwistle says.
Job: Chairman, Scoban.
Born: Croydon, Surrey, in 1944.
Education: John Ruskin Grammar, FCIB, FCIBS, chartered banker.
First job: Banker, at the age of 16.
Kindle or book? Book, particularly Gerald Seymour novels – read them all.
Music: Sadly, 1960s.
Favourite holiday destinations: Oman and Portugal.
Can’t live without: iPad, but, secretly, fountain pen.
Other interest: Crystal Palace FC.
Biggest hate: Excessive granular detail, rather than focusing on the main picture.
Best thing about your job: Spending a day with a client, perhaps walking on their Highland estate.