Acquisition

Rathbone Brothers PLC 13 January 2006 13 January 2005 Rathbone Brothers Plc 23.4% increase in funds under management and acquisition of Dexia's UK private banking business Highlights • Total funds under management increased by 23.4% over the 12 months to 31 December 2005 to £9.5 billion, including an increase of 46.5% in funds under management at Rathbone Unit Trusts to £1.2 billion. • Acquisition of Dexia's UK private banking business consisting of: • An investment management business (the former business of Ely Fund Managers) with total funds under investment management of just over £600 million as at 31 December 2005 for an amount up to a maximum of £14 million. • UK private banking loan and deposit book being purchased at net book value. • The acquisition is expected to be earnings-enhancing in 2007. Introduction Rathbone Brothers Plc ('Rathbones') has agreed to acquire the investment management and private banking business of Dexia Banque Internationale a Luxembourg S.A., London Branch (the 'Business'). The consideration payable for the Business, made up of initial and deferred amounts, will be a maximum amount of £14 million and is ultimately dependent on the value of the funds under management transferred. The UK personal banking book - consisting of approximately £50 million in loans and £20 million of deposits (in addition to uninvested capital balances from client portfolios of approximately £30 million) - is being purchased at book value. All consideration payments, including deferred payments, will be met from Rathbones' existing cash resources. Mark Powell, chairman of Rathbones, commented: '2005 was a year of further progress for Rathbones and demonstrates our ability to attract and retain client funds again resulting in strong funds under management numbers for the year. An increase in funds in our core discretionary investment management business of nearly 21% compares with increases in the FTSE APCIMS Balanced Index of 14.9% and of 16.7% in the FTSE 100 Index. The growth in unit trust funds was particularly pleasing and reflects excellent investment performance as well as energetic marketing. 'Added to this strong organic growth result, the acquisition of Dexia's UK private banking business is an excellent fit with Rathbones' existing discretionary investment management activities and is consistent with our strategy for all acquisitions and recruitments: the investment professionals joining us share our belief in personalised discretionary investment management and we are confident that the acquisition will be earnings-enhancing.' Description of the Business The Business being acquired generated revenues of £5.77 million in the year ending 31 December 2004 and £2.9 million in the first half of 2005. It made an estimated positive contribution in 2004 of approximately £2.0 million and in the first half of 2005 of approximately £0.9 million after allocating client-facing front office and investment back office staff direct costs but before Dexia's central cost allocations. The Business being purchased consists of the former business of Ely Fund Managers, which was originally acquired by the Dexia group in 2001 and which has been integrated with the personal banking business of Dexia-BIL, London Branch. As at 31 December 2005, the Business' total funds under investment management were just over £600 million, including £326 million of private investor discretionary managed accounts, £190 million of charity funds and pension accounts, and a very successful managed pension fund and multi-manager portfolios. The loan book being acquired predominantly consists of secured loans to individuals and family groups. The Business will include the investment managers responsible for managing client accounts and separate agreements have been made with key individuals to effect their move to Rathbones. It will also include related investment support and operations staff. Terms of the acquisition The initial consideration for the investment management part of the Business will consist of £10 million or £7 million dependent on the final nature of the scheme implemented by the Court (see below). The deferred consideration will also be a variable element with maxima of £4 million and £7 million, respectively, depending on the total funds under management which are eventually transferred to Rathbones. The maximum total consideration for the investment management part of the Business will therefore not exceed £14 million and the deferred consideration period will be no longer than 13 months after closing. The Business will be transferred to Rathbone Investment Management Limited by way of a Court order sanctioning a banking business transfer scheme pursuant to Part VII of the Financial Services and Markets Act 2000. The acquisition is subject to regulatory and Court approval but it is expected that completion will take place by the end of April 2006. Clients of the Business will be receiving letters from Dexia BIL in the near future. Reasons for and benefits of the acquisition The Business will be integrated into Rathbone Investment Management Limited which is responsible, within Rathbones, for the bespoke management of £8.3 billion in discretionary investment portfolios for individuals, their trusts, charities and pension funds (as at 31 December 2005). Rathbone Investment Management Limited also holds a banking licence. The acquisition will expand Rathbones' role as a manager of investment portfolios for charities and increase its business in the management of pension accounts for private individuals. In addition, it is expected that economies of scale will be generated for the discretionary managed portfolio being acquired through the use of Rathbones' operations platform. Overall, the acquisition is expected to be earnings-enhancing in 2007. Charles Good, managing director of Dexia Private Banking UK, commented: 'Following Dexia's decision to exit from private banking activities in the UK, I am pleased to say that we have found in Rathbones a good home for our business. Their culture is right for us and they are at one with our belief in delivering the best possible investment and banking services to clients, where we believe there continue to be significant opportunities for growth.' Ends Enquiries: Rathbone Brothers Plc www.rathbones.com Mark Powell, Chairman 020 7399 0000 Andy Pomfret, Chief Executive Emily Morris, Marketing Director Smithfield Reg Hoare/Katie Hunt 020 7360 4900 Notes for editors: Rathbones Rathbone Brothers Plc specialises in providing, through its subsidiaries, personalised investment management and wealth management services for private clients and trustees, including discretionary asset management, tax planning, trust and company management, and banking services. It manages £9.5 billion of funds, including £1.2 billion managed by Rathbone Unit Trust Management Limited (as at 31 December 2005). Dexia Private Banking UK Dexia Private Banking UK is the product of the integration of the personal banking activities of Dexia-BIL's branch in London and Ely Fund Managers, which was established in 1983 and acquired by Dexia-BIL in 2001. Ely Fund Managers acquired Pembroke Asset Management (a multi manager operation) in 1995 and Independent Investment Management (a charity fund management business) in 2000. Dexia Banque Internationale a Luxembourg is one of the major subsidiaries of the Dexia Group, one of the top-15 banking groups in Europe. Founded in 1856, Dexia-BIL is specialised in private banking, asset management and fund administration, and it operates in several countries worldwide. This information is provided by RNS The company news service from the London Stock Exchange QGUUGCGUPQGBP
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