Staff 'bruised' as profits dive at Adam & Co

The firm, which has been part of Royal Bank of Scotland since 1993, blamed the 26 per cent fall in pre-tax profits on a "multi-million pound" investment in an IT system being rolled out across all of RBS's wealth management division, including the Queen's bank Coutts.

Graham Storrie, who took over as managing director in January, also said income had taken a hit as the bank sought to offer its wealthy customers "competitive" interest rates despite the Bank of England's base rate remaining at a historic 0.5 per cent low.

But in his first interview since taking the helm, Storrie argued that Adam & Co had turned a corner after a "fairly tough" 12 to 18 months and it is "on track" to meet 2011 targets. He revealed the bank will move from its historic Charlotte Square headquarters to more modern premises at St Andrew Square in November and believes it will help provide staff with a "new focus".

The bank, whose wealthy clients are rumoured to include Andy Murray, operated independently until last year when RBS chief Stephen Hester cleared out nine members of its 11-strong board and it was integrated into RBS's wider wealth management division.

About 30 staff jumped ship amid the changes. Those who left included its former managing director David Cathie. At the same time, the firm was hit by customer complaints about its service. This year the global head of RBS's wealth management business told Scotland on Sunday that "laziness" had been at the heart of the crisis of confidence at Adam & Co.

Storrie said some staff and clients may have felt "bruised" by their experiences over the past year but he insisted the company was in much better shape and in a position to take advantage of "huge potential opportunities" in the wealth management market.

It has drafted in former Scotland rugby captain Andy Nicol to head a five-strong business development team to help grow the business across the UK.

"Over the last five months, things have stabilised, (staff] turnover has dropped way off and we are in a much, much more stable place," Storrie said.

Pre-tax profits dropped to 18 million last year from 24.2m in 2009 while income was down 14 per cent to 52.7m. But Storrie said that bad loans and impairments fell 79 per cent last year to 400,000 while client deposits grew 7 per cent to 1.92 billion.Client loans were also up 2 per cent to 773m.

Despite the fierce competition in the Scottish wealth management market - which has seen a string of newcomers open up shop over the past 12 months - Storrie said there were still growth opportunities for Adam & Co which offers private banking, investment management and financial planning. Increasingly customers are looking to source all three services from one provider, he said.

Storrie insisted that last year's profits - although down significantly on 2009 - were "resilient". "We still made a significant profit of 18m so we are still a profitable bank and we are very clear in terms of what has driven that.

"We have continued to pay our clients attractive rates of interest on their deposits and when you do that in a low interest rate environment then it impacts on your net interest income. But we felt that was the right thing to do to reward our clients' loyalty.

"Also we have made a significant investment in the infrastructure, the technology - it's a multi-million pound investment across the overall RBS wealth business and we pick up our share of that but that's an investment that sets us up for future."

As a result of the roll-out of the new technology, which streamlines different operating systems and will allow customers a greater variety of services online, 130 "back office" administrative roles were lost last year.

Storrie said that redundancy process has now come to an end and the remaining 160 staff employed at the bank's Edinburgh headquarters will transfer to the new premises at 24-25 St Andrew Square later this year.