Boutique Bank: High Street Expansion Poses No Threat

The Rise of Wealth Management in London

One of London’s oldest private banking institutions has raised concerns about the growing competition from major British banks entering the wealth management sector. Andrew Salmon, the head of Arbuthnot Latham, emphasized that while larger banks may aim for high-net-worth clients, his institution’s approach offers a more personalized service.

Salmon stated that to receive personal service from some of these bigger banks, clients would need to have tens of millions in assets, not just two to ten million. This highlights the difference between the traditional private banking model and the strategies of larger financial institutions.

Arbuthnot Latham requires new clients to have at least £750,000 in deposits, investments, or borrowing. In 2025, the bank’s wealth arm saw its funds under management increase by over a fifth to £2.7 billion. Total deposits at the group also rose by 11% to £4.6 billion, which Salmon described as a sign that their model is working effectively.

Intensifying Competition in the Wealth Sector

Despite its success, Arbuthnot Latham faces increasing competition from other financial giants aiming to capture a share of the wealth management market. Natwest recently acquired Evelyn Partners in a £2.7 billion deal, marking the firm’s largest acquisition since the financial crisis. This move is seen as a strategic step towards future growth.

HSBC also made a significant investment by spending $5 million on its luxury wealth center in London last year, aiming to become one of the top five wealth managers in the UK. These developments underscore the growing interest in the wealth management sector.

Challenges in Maintaining Personalized Services

While Arbuthnot Latham has successfully grown its AUM and attracted new customers, it has also faced challenges in maintaining its personalized approach. The bank’s wealth arm reported a loss of £3 million in 2025, although this was a slight improvement from £4.9 million in the previous year.

Salmon acknowledged that the cost of maintaining a tailored approach has been “hugely costly.” To address this, the bank is investing in new software to revamp its services. However, savings are not expected until 2027.

The wealth arm also experienced a hit due to changing client behavior. Clients shifted away from risky investments to simpler government bonds, which yield smaller fees for the bank. Additionally, the recent office move led to a 17% increase in shared bills.

The division is now targeting a return to profitability in 2026. On a group level, pre-tax profit came in at £24.2 million, a decrease from £35.1 million. Operating costs increased to £147 million from £139 million, driven by higher staff costs.

Government Policies and Their Impact

Salmon criticized government policies over the past two years, which he believes have hampered business sentiment and increased costs. He pointed out that taxes such as national insurance have risen significantly, adding to the burden on businesses.

“It’s not a business-friendly government… [the national insurance tax hike] is not good. I think I’ve been shocking people recently by [pointing out] the amount we pay in rates – it’s all the taxes before you even get to corporation tax. They’ve all just gone up.”

The Brain Drain Concern

As the Autumn Budget approached, the banking industry lobbied to avoid a potential tax raid. Rachel Reeves faced pressure from various political figures, including former Deputy Prime Minister Angela Rayner.

Banks are subject to a sector-specific levy on top of corporation tax, VAT, property taxes, and national insurance. This surcharge stands at three percent, down from eight percent under the previous government.

The delayed Budget, held on 26 November, caused many firms to pause investment plans. Business surveys indicated a slowdown in growth during the six to eight weeks leading up to the budget.

Reeves raised taxes by £26 billion in the Budget, targeting wealthy Brits through measures like a ‘mansion tax’ on properties worth over £2 million. Salmon questioned how economic growth could be accelerated if money was continually taken out of businesses.

Such tax increases, along with a £40 billion tax raid in the 2024 Budget, have led to an exodus of Brits leaving the City, referred to as a ‘brain drain.’ Salmon noted that in the last year, there have been numerous conversations about people moving abroad, and some have already left.

“It’s not just made up, people are leaving.”