Rathbones gains £400m of assets in Edinburgh from Bank of Scotland

Published on Saturday 12 December 2009 13:31

INVESTMENT firm Rathbones has boosted its business in Edinburgh by £400 million in under two months after doing a deal to take on portfolios of private client funds from Bank of Scotland.

As part of the agreement with BoS owner Lloyds Banking Group, Rathbones said it would only pay for assets from BoS's portfolio management service (PMS) once they were transferred, rather than paying an upfront fee.

Since the deal completed on 21 October, more than 2,200 clients have moved to Rathbones, bringing assets worth more than 400m. That means 57 per cent of the former BoS clients have decided to switch to the firm, although they were under no obligation to do so.

As revealed in The Scotsman in October, the deal between Lloyds and Rathbones ran into difficulties when eight of the 14 portfolio managers from BoS defected to rival firm Rensburg Sheppards. Rathbones was concerned that clients would follow the managers, which could see it paying for nothing unless it agreed certain conditions with Lloyds. Rathbones said it would pay 2.4 per cent of the total assets which were transferred when clients sign up. The total it will pay for the assets transferred in the last seven weeks is 9.6m.

Rathbones is headquartered in London and for ten years has had a presence in Edinburgh, where more than 1.1 billion of funds are managed. It is thought to be the second biggest investment manager in Edinburgh behind Brewin Dolphin.

It will be taking on a further six investment managers from BoS when it winds down PMS by the end of 2011. They are: Carol Macintyre, Clare Gunn, Graham Quinney, Iain Currie, Justin Armet and Mark Malinen.

David Macauley, investment director at Rathbones in Edinburgh, said: "The transfer of assets has gone so much more quickly than we thought. Some clients have moved to other firms, including Williams de Broe and Brewin Dolphin. But we're speaking to as many clients as possible. The deal has added more Scottishness to our firm."

The process of transferring clients has been speeded up by the City regulator agreeing to give Rathbones' managers dual authorisation with BoS, which allows them to contact PMS clients.

The firm has seconded a number of managers to BoS. As an incentive to clients it is waiving its annual management fee until the end of next year. Macauley said that a lot of the clients still to transfer were charities, which tend to take longer to move as decisions have to be made by a board of trustees.

On the back of winning the new business, Macauley said the firm will be moving to bigger offices in Edinburgh and will expand into Aberdeen in the early part of next year.

He added: "Ideally, we would like to get established in Glasgow and we would do that through an existing operator if the opportunity came up."

Rathbones has ten offices across the UK and manages more than 12bn of assets.