A PRIVATE bank founded in Scotland in 2015 has become the beneficiary of Smith & Williamson’s decision to give up its banking licence, with Hampden & Co inheriting £35 million worth of loans made to the financial services firm’s clients.
Smith & Williamson, which is being bought over by wealth management business Tilney in a £625m deal, said that as it is relinquishing its banking licence it had chosen to pass its loan book to Edinburgh-headquartered Hampden because it felt the business shared its “culture and sense of commitment”.
“It is crucial that our clients continue to receive the same high level of service that they have been accustomed to,” Smith & Williamson joint chief executive David Cobb said.
At Hampden, which was founded by former Adam & Co chairman Ray Entwistle, the deal will significantly bolster the bank’s lending book, which grew by 40 per cent to £132.5m in the 12 months to December 2018.
The new loans, which are secured against Smith & Williamson client investment portfolios, are expected to transfer to Hampden by the end of the current financial year.
Hampden chief executive Graeme Hartop said the deal, which will see the bank “work collaboratively” with Smith & Williamson, was in line with the bank’s growth strategy.
“When we launched Hampden & Co we identified an opportunity in the market for a private bank that focused exclusively on high quality, service-led banking, and so would be well positioned to work collaboratively with specialist wealth managers like Smith & Williamson,” he said.
“We have been growing strongly year-on-year since launch, and a key component of that growth has stemmed from recommendations from UK professionals in the high-net-worth space.”
As well as growing its loan book by 40% in the last financial year, the bank saw its deposits grow by 37%, from £194.6m to £267.5m.
Despite income also rising, by 63% to £6.4m, the bank continued to make a loss on a pre-tax basis, although the figure fell from £6.4m to £5.8m.
Although Mr Entwistle was the driving force behind the bank, he retired as chairman in August last year. He was replaced by Alan Hughes, who retired earlier this month. Alex Hammond-Chambers, who chairs the bank’s remuneration committee, has taken over as interim chairman until a replacement can be found.
Meanwhile, it was announced in September that London-headquartered Tilney, which has offices in Aberdeen, Edinburgh and Glasgow, will acquire Smith & Williamson in a deal that is expected to complete next year. The enlarged business will be known as Tilney Smith & Williamson.
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