Rathbone Brothers : 31 December 2020 Pillar 3 disclosures

Rathbone Brothers Plc

Pillar 3 disclosures

For the year ended 31 December 2020

Contents

		Page
1	Disclosure	2
2	Corporate background	3
3	Risk management objectives & policies	5
4	Own funds disclosures	8
5	Own funds requirements	11
6	Credit risk	17
7	Standardised approach to credit risk	22
8	Liquidity risk	24
9	Interest rate risk in the banking book	25
10	Non-trading book exposures in equities	26
11	Remuneration code	27
12	Appendices	29

Definition of key terms:

Rathbones	the trading name for the group of companies owned by Rathbone
Brothers Plc
board	the board of directors of Rathbone Brothers Plc
executive directors	directors on the group executive committee
FUM	funds under management
RIM	Rathbone Investment Management Limited
RIMI	Rathbone Investment Management International Limited
S&J	Speirs & Jeffrey Limited
investment management business	services provided by Rathbone Investment Management Limited ('RIM')
and Rathbone Investment Management International Limited ('RIMI')
the group	Rathbone Brothers Plc and all its subsidiaries
regulator	Prudential Regulation Authority ('PRA') or Financial Conduct Authority
('FCA') or European Banking Authority ('EBA'), as appropriate
trading book	positions in financial instruments and commodities held either with trading
intent or in order to hedge such positions
trust & taxation business	services provided by Rathbone Trust Legal Services Limited and
Rathbone Trust Company Limited
CRR or CRD	Capital Requirements Regulation and Capital Requirements Directive

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1 Disclosure

This document sets out the consolidated Pillar 3 disclosure requirements that are required by CRR and the regulator. It is intended to complement the minimum capital requirement (Pillar 1) and the supervisory review process (Pillar 2) and provides key information on our risk management and control process, remuneration and capital position.

Rathbone Brothers Plc is subject to consolidated supervision by the regulator. The group's principal operating subsidiaries are detailed more fully in section 2. All subsidiaries are limited by ordinary shares, and other than the requirements to hold regulatory capital there are no practical or legal impediments to the prompt transfer of capital between Rathbone Brothers Plc and its subsidiaries.

1.1 Scope of application

Rathbone Brothers Plc is the parent company of the group and is required to produce consolidated returns to assess its regulatory own funds, own funds requirements and liquidity management. These are prepared on the same consolidation basis as the statutory financial statements produced for its annual report & accounts.

1.2 Frequency

Pillar 3 disclosures are made on an annual basis.

1.3 Location

The report is published in the investor relations section of the Rathbones website, and can also be available on request by writing to Jennifer Mathias, group finance director, Rathbone Brothers Plc, 8 Finsbury Circus, London EC2M 7AZ.

1.4 Verification

Disclosures are unaudited but have been verified internally. They will only be subject to external verification to the extent they are equivalent to those made in published financial information prepared in accordance with International Accounting Standards. These disclosures explain how the board has calculated certain capital requirements and information about risk management generally. They do not constitute financial statements and should not be relied upon in making judgements about Rathbones or for any other purpose other than that for which they are intended.

1.5 Reference to annual report and accounts.

The document is to be read in conjunction with the annual report and accounts with specific reference to the following sections included within this document:

Section	Pages		Areas covered
Financial position	42	- 44
				Identification of risks
				Risk assessment process
Risk management and control	46	- 51		Profile and mitigation of principal risks
	Key changes to risk profile
				Emerging risks and threats
				Principal risks
Responsible business report	52	- 74		Diversity policy
	Climate-related financial disclosure
				Board external directorships
Corporate governance report	76	- 91		Diversity in board membership
				Board recruitment and development
				Committee roles and responsibilities
Group risk committee report	92	- 94		Committee meetings
				Committee effectiveness
Audit committee report	95	- 99
Nomination committee report	100	- 102		Committee roles and responsibilities
	Talent and Succession planning
Remuneration committee report	103	- 126
Consolidated financial statements	132	- 202

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2 Corporate background

Rathbones provides individual investment and wealth management services for private clients, trustees and professional partners. We have been trusted for generations to manage and preserve our clients' wealth. Our tradition of investing and acting responsibly has been with us from the beginning and continues to drive us forward. Our ambition is to be recognised as the UK's most responsible wealth manager.

The group is organised into two operating segments: Investment Management (including the other complementary services outlined below) and Unit Trusts.

2.1 Investment Management

Through Rathbone Investment Management Limited ('RIM'), we provide investment management solutions to a range of private clients, charities, trustees and professional partners. Clients of this service can expect a tailored investment strategy that meets investment objectives backed by an investment process that aims to provide risk-adjusted returns to meet clients needs today and in the future.

We also manage £6.5bn for charities and Rathbone Greenbank Investments manages £1.9bn in ethical and socially responsible investment portfolios. Our specialist Personal injury and court of protection team works closely with deputies, trustees and families, seeking to provide a consistent and rigorous investment process sympathetic to individual circumstances.

Our offshore discretionary investment services are provided by Rathbone Investment Management International Limited ('RIMI'), which is registered in Jersey.

Complementary services include:

• Rathbone Financial Planning: our in-house financial planning team provides whole-of-market advice to clients. The planners work closely with investment managers to help clients create a bespoke financial plan. We have long-standing experience and can act on a one-off basis or as part of an ongoing service;
• Unitised Portfolio Service: using Rathbone Multi Asset Portfolio funds, we offer clients with investible assets of £25,000 or more our model-based discretionary investment management services. This is designed for clients who do not require a fully bespoke investment solution, but still want access to an investment manager to ensure investment needs are selected and monitored to suit their individual circumstance;
• Managed Portfolio Service: a simple and straightforward execution-only investment service which gives clients with £15,000 or more the ability to access high-quality investments. The service is delivered via an advisor at a price that reflects the competitive nature of our sector, but to a standard that clients have come to expect from Rathbones;
• Rathbone Select Portfolio: an attractive and cost-effective investment solution for clients with £15,000 or more to invest for at least three years. Providing access to the Rathbone Multi-Asset Portfolio funds on a self-select basis, this service is designed for clients who are comfortable choosing an investment strategy to meet their investment objectives and risk profile;
• Banking and loan services: we offer loans to our existing clients secured against their investment portfolios and, in some cases, other assets. As a licenced deposit taker, we are also able to offer our clients a range of banking services including currency and payment services, and fixed interest term deposits;
• Rathbone Trust Company: we provide UK trust and specialist legal, estate and tax advice to larger clients;
• Vision Independent Financial Planning: an independent IFA network providing financial advisory solutions to UK private clients. Acquired in 2015, it has grown from £845 million of assets on its discretionary fund manager panel and 81 advisers to £2.2 billion and 131 independent financial advisers.

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Investment management clients are generally charged using either a fee and commission-based, or a fee- based tariff with securities held in a Rathbone Nominee company. The cash component of RIM client portfolios is held by RIM, an authorised banking institution. At 31 December 2020, funds under management were £44.9bn. All of the funds held for clients are considered to be held for long-term investment purposes and do not represent 'transactional' accounts used for day-to-day banking services.

2.2 Unit Trusts

Rathbone Unit Trust Management Limited ('RUTM') is an UK active fund manager with £9.8bn under management at 31 December 2020, providing a range of specialist and multi asset funds that are designed to meet core investment needs in the retail client market. These funds are distributed primarily through financial advisers in the UK.

Our funds can also be accessed by international clients through our Rathbone Luxembourg Funds SICAV (Société d'Investisement à Capital Variable) which allows access to a similar range of actively managed funds.

2.3 Regulation

Within the UK, RUTM and Vision are regulated by the FCA, RIM is regulated jointly by the PRA and the FCA and the group is subject to consolidated supervision by the PRA. Rathbone Trust Legal Services Limited is regulated by the Solicitors Regulation Authority and, together with RTC, they are subject to HMRC regulations for money laundering purposes. RIMI is subject to regulation by the Jersey Financial Services Commission.

2.4 Corporate governance

The Group board meets at least six times a year with one meeting devoted entirely to strategy. In months where no formal board meeting is scheduled an informal meeting of the non-executive directors, the chairman and group chief executive is ordinarily held.

The five principal Rathbone Brothers Plc board committees are the group executive committee, audit committee, remuneration committee, group risk committee and nomination committee.

The principal RIM committees are the General Managers Committee, the Banking Committee as well as the Investment Executive Committee and Client Committee. All of these committees have executive director representation. There is also the RIM CASS Governance Committee which is chaired by the SMF24.

Rathbone Brothers plc

Board of directors

Group executive		Remuneration		Nomination		Audit		Group risk
committee		committee		committee		committee		committee

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