Proposed sale of ordinary shares in Secure Trust

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA, JAPAN OR THE REPUBLIC OF SOUTH AFRICA.

FURTHER, THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND SHALL NOT CONSTITUTE AN OFFER TO SELL OR ISSUE OR THE SOLICITATION OF AN OFFER TO BUY, SUBSCRIBE FOR OR OTHERWISE ACQUIRE ANY ORDINARY SHARES OF SECURE TRUST BANK PLC IN ANY JURISDICTION IN WHICH ANY SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL.

This announcement should be read in its entirety.

                                                                                                                                                                27 May 2016

Arbuthnot Banking Group PLC ("Arbuthnot" or the "Company")

Proposed sale of ordinary shares in Secure Trust Bank PLC ("Secure Trust")

Arbuthnot today announces its intention to sell approximately 5.8 million ordinary shares of 40 pence each in Secure Trust (the "Sale Shares"), such amount to potentially increase subject to additional demand being secured, representing approximately 31.9 per cent. of Secure Trust's existing issued share capital, by way of a secondary placing to institutional investors only (the "Sale"). The Sale is expected to be priced at £25 per Sale Share (the "Sale Shares Price") which represents a 10.7 per cent. discount to the closing price of Secure Trust's ordinary shares (the "Ordinary Shares") as of 26 May 2016.

Assuming completion of the Sale, the Company's interest in Secure Trust will reduce from 51.9 per cent. to approximately 20.0 per cent. of Secure Trust's issued share capital and would generate gross proceeds of approximately £145 million for Arbuthnot.

The Company has been informed by Secure Trust that its intention, conditional on completion of the Sale, would be to commence a process to seek to move to a Premium Listing on the Main Market of the London Stock Exchange. As part of the intended move to the main market Secure Trust will address its Corporate Governance structure and Sir Henry Angest, non-executive Chairman of Secure Trust and Chairman and Chief Executive Officer of Arbuthnot has signalled his intention to commence a search for a new independent Non-Executive Chairman of Secure Trust.

Arbuthnot has also been informed by Secure Trust that the special dividend of 165 pence per Secure Trust ordinary share  relating to the sale of the Everyday Loans Group, which was conditionally announced on 17 March 2016 (the "Special Dividend"), is not expected to be declared until after completion of the Sale. The record date of the Special Dividend is also expected to be after the Sale has completed and accordingly, assuming the Sale completes, the Special Dividend relating to the Sale Shares would be received by the holders of the Sale Shares at the record date for the Special Dividend and not Arbuthnot. The Sale Shares rank pari passu in all respects with the Ordinary Shares.

As the proposed Sale, if completed, would represent a fundamental change of business for Arbuthnot under the AIM Rules for Companies, the Sale will be conditional upon a resolution (the "Resolution") being passed by Arbuthnot's shareholders at a general meeting of Arbuthnot (the "General Meeting") and will also be subject to the satisfaction or waiver of certain customary conditions. Sir Henry Angest proposes to sign an irrevocable undertaking to procure that the votes pertaining to his 55.08 per cent. beneficial holding in Arbuthnot are cast in favour of the Resolution and as such the Resolution is expected to be passed when it is put to shareholders.

At the time of Secure Trust's admission to trading on AIM in November 2011, the Company indicated that over time it would be willing to see its interest in Secure Trust be further diluted to allow Secure Trust to grow as the opportunities arose, in an appropriate way, to enhance value for all of Secure Trust's shareholders. The growth of Secure Trust in the last four and half years has been substantial, and the Company believes that now is the appropriate time to reduce its holding in Secure Trust to a non-controlling position, in order to broaden the range of strategic options available to Secure Trust. 

The Company intends to use the proceeds and capital generated from the Sale to accelerate the growth of Arbuthnot and its subsidiaries, including the private and commercial banking business within Arbuthnot Latham & Co., Limited, as well as to invest in and develop over time other businesses in accordance with the Company's strategy.

The Sale will be managed by Stifel Nicolaus Europe Limited (trading as Keefe Bruyette & Woods), acting as sole bookrunner (the "Bookrunner"). Non-binding indications of interest have been received from institutional investors for all of the Sale Shares at the Sale Shares Price. The book for the Sale will open with immediate effect following this announcement. Final pricing and allocations are expected to be announced as soon as practicable following the closing of the book, which will be at the absolute discretion of the Bookrunner. The Sale is not being underwritten.

Arbuthnot has confirmed that, following completion of the Sale, it does not intend to sell any further ordinary shares in Secure Trust for at least 180 days following completion of the Sale, other than with the agreement of the Bookrunner.  

A further announcement will be made in due course.

Expected timetable

Enquiries:

Disclaimer

Stifel Nicolaus Europe Limited (trading as Keefe Bruyette & Woods) is acting on the Sale and will not be responsible to anyone other than its client for providing the protections afforded to its clients, nor for providing advice in relation to the Sale, the contents of this announcement, or any transaction or arrangement referred to herein.

Canaccord Genuity Limited is the Company's Nominated Adviser. The responsibilities of Canaccord Genuity Limited, as Nominated Adviser under the AIM Rules and the AIM Rules for Nominated Advisers, are owed solely to the London Stock Exchange and are not owed to the Company, any Shareholder or any Director of the Company or to any other person in in relation to the Sale, the contents of this announcement, or any transaction or arrangement referred to herein. Canaccord Genuity Limited is acting exclusively for the Company and for no one else in relation to the Sale and will not be responsible to any person other than the Company for providing the protections afforded to its clients or for providing advice in relation to the Sale.

This announcement is not for publication or distribution, directly or indirectly, in or into the United States of America.  This announcement is not an offer of securities for sale into the United States.  The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States, except pursuant to an applicable exemption from registration.  No public offering of securities is being made in the United States.

This announcement is for information purposes only and does not constitute or form part of an offer or invitation to acquire or dispose of any securities of Secure Trust, or constitute a solicitation of any offer to purchase or subscribe for securities in any jurisdiction, including Canada, Australia, Japan or the Republic of South Africa.

Secure Trust's shares may not, directly or indirectly, be offered or sold within Canada, Australia Japan or the Republic of South Africa or offered or sold to a resident of Canada, Australia, Japan or the Republic of South Africa. No public offering of securities is being made in the United States or elsewhere.

Neither this announcement nor any copy of it may be taken, or transmitted or distributed, directly or indirectly, in or into or distributed to persons in, the United States of America, its territories or possessions or to any US person (within the meaning of Regulation S under the US Securities Act of 1933, as amended). Neither this announcement nor any copy of it may be taken, transmitted or distributed, directly or indirectly, in or into Australia, Canada, Japan or the Republic of South Africa. Any failure to comply with this restriction may constitute a violation of United States, Australian, Canadian, Japanese or South African securities laws.

The distribution of this announcement in certain other jurisdictions may be restricted by law and persons into whose possession this announcement comes should inform themselves about, and observe, any such restrictions. 

MEMBERS OF THE GENERAL PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE SALE. THIS ANNOUNCEMENT AND ANY OFFER OF SECURITIES TO WHICH IT RELATES ARE ONLY ADDRESSED TO AND DIRECTED AT PERSONS (1) IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA WHO ARE QUALIFIED INVESTORS WITHIN THE MEANING OF ARTICLE 2(1) (E) OF EU DIRECTIVE 2003/71/EC, AS AMENDED, INCLUDING BY THE 2010 PROSPECTUS DIRECTIVE AMENDING DIRECTIVE 2010/73/EC TO THE EXTENT IMPLEMENTED IN THE RELEVANT MEMBER STATE (THE "PROSPECTUS DIRECTIVE") ("QUALIFIED INVESTORS"); AND (2) IN THE UNITED KINGDOM WHO ARE QUALIFIED INVESTORS AND (A) HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS AND FALL WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005, AS AMENDED, (THE "ORDER") OR (B) FALL WITHIN ARTICLE 49(2)(A) TO (D) ("HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC.") OF THE ORDER OR (C) ARE PERSONS TO WHOM THIS ANNOUNCEMENT AND ANY OFFER OF SECURITIES TO WHICH IT RELATES MAY OTHERWISE LAWFULLY BE COMMUNICATED OR MADE (ALL SUCH PERSONS REFERRED TO IN (1) AND (2) TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS"). THE INFORMATION REGARDING THE SALE SET OUT IN THIS ANNOUNCEMENT MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS ANNOUNCEMENT RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS.

No prospectus or offering document has been or will be prepared in connection with the Sale. Any investment decision to buy securities in the Sale must be made solely on the basis of publicly available information. Such information is not the responsibility of and has not been independently verified by the Company or by Stifel Nicolaus Europe Limited (trading as Keefe Bruyette & Woods) or any of their respective affiliates.