Arbuthnot Banking : Pillar 3 Disclosures 2023 – Interim

ARBUTHNOT BANKING GROUP PLC

PILLAR 3 DISCLOSURES FOR THE SIX MONTHS ENDED 30 JUNE

2023

Version: 1

Date:

18 August 2023

Contents

Arbuthnot Banking Group PLC

Pillar 3 disclosures for the six months ended 30 June 2023

Overview	1
Key Regulatory Metrics	3

Overview

Arbuthnot Banking Group PLC

Pillar 3 disclosures for the six months ended 30 June 2023

Background

The Group's lead regulator, the Prudential Regulation Authority ("PRA"), sets and monitors capital requirements for the Group as a whole and for its regulated subsidiaries. The lead regulator adopted the EU Capital Requirement Regulation (575/2013) ("CRR") and the EU Capital Requirement Directive (2013/36/EU) ("CRD"). The requirements of the CRD had to be implemented into UK law and this was done primarily through the Financial Conduct Authority ("FCA") Handbook and PRA Rulebook.

EU Directive 2019/878 ("CRDV") amended the CRD and in the UK the PRA Rulebook and FCA Handbook were updated to capture the requirements applying from 29 December 2020. The CRR, as a Regulation, was directly applicable in the UK and because this applied before 11pm on 31 December 2020 it has been retained in UK law.

CRD V introduced a new requirement for certain types of parent financial holding company or mixed financial holding company to be subject to PRA supervisory approval and consolidated supervision. Arbuthnot Banking Group PLC ("ABG") was approved by the PRA as a Parent Financial Holding Company on 10 November 2021 (effective 22 October 2021). Following its approval, ABG is responsible for ensuring compliance with consolidated prudential requirements.

The Disclosure (CRR) Part of the PRA Rulebook, applicable from 1 January 2022, sets out disclosure requirements for banks operating under the regime. The disclosure requirements (Pillar III) aim to complement the minimum capital requirements (Pillar I) and the supervisory review process (Pillar II) and aim to encourage market discipline by allowing market participants to assess key pieces of information on risk exposures and the risk assessment processes of the Group.

This document should be read in conjunction with the Group's Report and Accounts for 30 June 2023.

Scope

The disclosures have been prepared at a consolidated level for ABG. There are no differences between the basis of consolidation of the Group for accounting and regulatory purposes.

The Group's banking subsidiary, Arbuthnot Latham & Co., Limited ("AL"), is authorised by PRA and regulated by the FCA and by the PRA. Three of AL's subsidiaries, Asset Alliance Leasing Limited, Forest Asset Finance Limited and Renaissance Asset Finance Limited ("RAF"), are regulated by the FCA.

AL reports to the PRA on a solo-consolidated basis. The solo-consolidated group includes RAF, the entities within the Asset Alliance Group, and the unregulated subsidiaries Arbuthnot Commercial Asset Based Lending Ltd ("ACABL") and Arbuthnot Specialist Finance Limited ("ASFL").

Disclosure Policy

The Pillar III disclosures will be issued, at a minimum, in accordance with the frequency requirements of the PRA Rulebook. This document provides the required disclosure as of 30 June 2023.

ABG is a small and non-complex institution1. Therefore, in accordance with the Disclosure (CRR) Part of the PRA Rulebook ABG's Pillar III disclosure requirements can be summarised as:

• On a semi-annual basis

• 1. The key metrics in accordance with PRA template UK KM1.
• On an annual basis:
• 1. Risk Management Objectives and Policies as required within points (a), (e) and (f) of Article 435(1) of the

Disclosure (CRR) Part of the PRA Rulebook;

1. Disclosure of Own Funds Requirements and Risk-Weighted Exposure Amounts: as required within point (d) of Article 438 the Disclosure (CRR) Part of the PRA Rulebook;

o Remuneration Policy: as required within points (a) to (d), (h), and (i) of Article 450(1) of the Disclosure (CRR) Part of the PRA Rulebook.

1 As defined in Article 4(1)(145) of the CRR

1

Overview

Arbuthnot Banking Group PLC

Pillar 3 disclosures for the six months ended 30 June 2023

The Group regularly monitors that it continues to meet the definition of a small and non-complex institution and if it ceases to meet the requirements the Pillar III disclosures will be updated accordingly. As part of its implementation of the Basel 3.1 standards and Strong and Simple regime the PRA is consulting on changes to Pillar III. The Group will continue to monitor these regulatory developments to ensure that its disclosures continue to be in accordance with PRA rules and expectations and industry best practice.

The Pillar III disclosures are subject to internal review procedures broadly consistent with those undertaken for unaudited information published in the Report and Accounts. The information contained in this document has not been audited by the Group's external auditors, except to the extent it is deemed to be equivalent to that made under accounting or listing requirements.

The Pillar III disclosures have been prepared purely for explaining the basis on which the Group has prepared and disclosed certain regulatory requirements and information about the management of certain risks and for no other purpose. They do not constitute any form of financial statement and must not be relied upon in making any judgement on the Group.

Attestation

The Group Finance Director attests that ABG has made the disclosures within this document in accordance with the requirements of the Disclosure (CRR) Part of the PRA Rulebook. Preparation of these disclosures has followed the Disclosure Policy, as above, and ABG's internal processes, systems and controls.

Media and location

The report will be published on the Arbuthnot Banking Group PLC corporate website: (www.arbuthnotgroup.com).

2

Key Regulatory Metrics

Arbuthnot Banking Group PLC

Pillar 3 disclosures for the six months ended 30 June 2023

The following table, UK KM1, provides a summary of the Group's main prudential regulatory ratios and measures2.

The ratios are reviewed on a monthly basis to ensure that external requirements are adhered to. During the period all regulated entities have complied with all externally imposed capital and liquidity requirements to which they are subject.

The capital ratios and measures below are presented on a transitional basis and, therefore, include permissible adjustments for the IFRS9 transitional relief.

Point (h) of Article 447 of the Disclosure (CRR) Part of the PRA Rulebook requires the reporting of own funds and eligible liabilities ratios as calculated in accordance with CRR Articles 92a and 92b and broken down at the level of each resolution group, where applicable. Both these CRR Articles only apply to G-SIIs and so are not applicable to the Group.

2 Disclosed in accordance with points (a) to (g) of Article 447 of the Disclosure (CRR) Part of the PRA Rulebook.

3