Following the boardroom clearout, only two members of the bank’s 11-strong board remain as directors – former non-executive director and RBS company secretary Miller McLean, who has taken over as chairman, and chief executive David Cathie, who arrived from National Australia Bank in 2005.
Three of Adam & Company’s directors are leaving or have left the bank altogether. These are long-serving chairman Ray Entwistle, non-executive director Simon Miller and chief risk officer John Hackett.
Six of the remaining executive directors still have roles with the bank although they have been stripped of their
board-director status.
In a letter to customers, Mr McLean said Mr Entwistle had made an exceptional contribution and that he was delighted and honoured to pick up the reins from him. Mr Entwistle said: “After 10 years as managing director and five years as chairman, it had reached the stage where it was time for me to move on. The boardroom clearout heralds a change in strategy at Adam & Co.”
The move has surprised members of Edinburgh’s financial sector, given that the elite Edinburgh-based institution is one of RBS’s few profitable arms.
“This is bizarre,” said one financial services industry source. “Why is a loss-making and failed bank, The Royal Bank of Scotland, removing the very people who made Adam a successful and profitable institution and replacing them with people with a lesser knowledge of the Scottish market?”
The seven departing executives are being replaced by three London-based executives from elsewhere in the RBS wealth-management division – Michael Morley, chief executive of Coutts, James Rawlingson, finance director of Coutts, and Byron Coombs, an investment service manager at RBS Asset Management.
Adam & Co was acquired by RBS for £10.5 million in 1993 but the larger bank allowed it to continue to function independently for most of the past 17 years. But this is now to be scrapped.
Instead, RBS is making a significant investment in developing a replacement system, a project being led by Adam & Co’s deputy chief executive, Lord Donald Graham, in tandem with his counterparts in other parts of RBS’s wealth-management business.
It is expected that this development will be good for customers because it will be more efficient than the existing system and lead to marked improvements to online banking.
One senior insider suggested the changes were overdue and they have been designed to ensure that Adam & Co, which will retain its separate banking licence with the Financial Services Authority, is fully structured to meet new international regulatory requirements.
RBS lost £24.1 billion in 2008 whereas Adam & Company made a pre-tax profit of £18.6m, up from £14.8m in 2007. Adam & Co had total assets of £2.44bn at December 2008, of which customer deposits represented £1.7bn
Last year three senior managers quit Adam & Co’s investment division to establish a Scottish outpost for Mayfair-headquartered wealth management group Brooks Macdonald. Those who quit were Adam & Co’s chief investment officer Gareth Howlett as well as Robin McAdam and Alastair Wilson.
Another investment manager, former Standard Life executive Amanda Forsyth, has also left to join rival boutique Charlotte Square Investments.
