Proposed Placing and Offers

Arbuthnot Banking Group PLC
31 March 2006


Not for release, distribution or publication in whole or in part in or into the
United States, Canada, Japan, Australia, the Republic of Ireland or South Africa

PRESS ANNOUNCEMENT

FOR IMMEDIATE RELEASE

31 March 2006

ARBUTHNOT BANKING GROUP PLC ('ARBUTHNOT BANKING GROUP', THE 'GROUP' OR THE
'COMPANY')

PROPOSED PLACING AND OFFERS OF UP TO 710,000 NEW ORDINARY SHARES AT 600 PENCE
PER NEW ORDINARY SHARE, APPROVAL FOR WAIVER OF RULE 9 OF THE CITY CODE AND
NOTICE OF EXTRAORDINARY GENERAL MEETING

1. Introduction

Following the announcement on 21 March 2006, Arbuthnot Banking Group today
posted a circular to its Shareholders setting out its intention to raise up to
approximately £4.3 million (£4.0 million net of expenses) by the allotment and
issue of up to 710,000 New Ordinary Shares at 600 pence per New Ordinary Share
pursuant to the terms of the Placing and Offers.

The Placing and Offers comprise (1) a firm placing of 347,305 Placing Shares to
Flowidea, a company beneficially owned by Mr Henry Angest, the Chairman of
Arbuthnot Banking Group; (2) a placing of 115,136 Vendor Shares with Cherrydene,
a company also beneficially owned by Mr Angest; (3) the First Offer of up to
247,559 Offer Shares made by Hawkpoint on behalf of the Company to Qualifying
Eligible Shareholders, on a basis proportional to their shareholdings; and (4)
the Second Offer of up to 115,136 Vendor Shares made by Cherrydene to Qualifying
Institutional Shareholders, on a basis proportional to their shareholdings, with
a minimum subscription requirement of £35,000. The Offer Shares are being
offered to Qualifying Eligible Shareholders on the basis of 1 Offer Share for
every 20 Existing Ordinary Shares held on the First Record Date. The Vendor
Shares are being offered to Qualifying Institutional Shareholders on the basis
of 1 Vendor Share for every 20 Existing Ordinary Shares held on the Second
Record Date. The Placing and Offers are conditional, inter alia, on approval by
the Independent Shareholders which will be sought at the Extraordinary General
Meeting of the Company to be held on 27 April 2006 at 2:00 p.m. The Issue Price
represents an 11.6 per cent. premium to the closing middle market price of 537.5
pence per Ordinary Share on 20 March 2006, the last dealing day before the
announcement of the Placing and Offers. The 710,000 New Ordinary Shares will
represent 5.0 per cent. of the Issued Share Capital of the Company immediately
prior to their issue.

The First Offer has been fully underwritten by Cherrydene subject to there being
no substantial deterioration in the price and/or value of the New Ordinary
Shares between the date of the circular and Admission.

Unless all Qualifying Eligible Shareholders apply for their pro rata
entitlements to Offer Shares and all Qualifying Institutional Shareholders apply
for their pro rata entitlements to Vendor Shares, the percentage interest of Mr
Angest in the Enlarged Share Capital will increase as a result of his beneficial
ownership of Flowidea and Cherrydene. As Mr Angest's beneficial holding
currently represents more than 30 per cent., and less than 50 per cent. of the
Issued Share Capital at the date of the circular, under Rule 9 of the City Code,
unless a specific waiver is obtained from the Panel and approved by the
Independent Shareholders, Mr Angest would be obliged to make a mandatory offer
for the Company if his percentage interest in the Company increased.

The purpose of the circular is to set out the reasons for, and provide the
details of, the Placing and Offers and to convene an Extraordinary General
Meeting at which the approval of the Independent Shareholders will be sought for
a waiver, which the Panel has agreed to give (subject to such approval), from
the obligation under Rule 9 of the City Code for Mr Angest to make a mandatory
offer for the Company in consequence of the Placing and Offers.

Shareholders should note that if, following the Placing and Offers, Mr Angest
holds over 50 per cent. of the total voting rights exercisable at general
meetings of Arbuthnot Banking Group, he will be free to acquire any number of
further Ordinary Shares without incurring any obligation under Rule 9 to make a
general offer to Shareholders. It should be noted that Mr Angest has no
intention of subsequently taking the Company private.

2. Background to the Company
Arbuthnot is a financial services business providing personal financial services
under the Secure Trust brand and private and investment banking under the
Arbuthnot name. The Company is admitted to trading on AIM and on 20 March 2006,
the last dealing date prior to the announcement of the Placing and Offers had a
market capitalisation of approximately £76.5 million with 14.23 million ordinary
shares in issue.

The operations of the personal financial services division encompass household
cash management (Secure Homes), personal lending (Secure Trust Bank) and
insurance services (Secure Direct), serving customers primarily in the West
Midlands and North of England. The private banking division provides commercial
and private clients with a range of financial products and services including
relationship banking, fund management and financial planning services. Arbuthnot
Securities provides investment banking services including corporate finance and
institutional stockbroking.

The Group is regulated by the Financial Services Authority. The Company is the
parent of two UK authorised banking institutions.
For the 12 months to 31 December 2005, the Company reported operating income of
£56.3 million, profits before tax of £7.7 million and net assets of £33.1
million.

3. Background to and reasons for the Placing and Offers
The net proceeds of the proposed Placing and Offers will be used to fund the
development of a high-quality, full-service, off-shore banking facility in
Switzerland.

In recent years, the Group has focused on improving its portfolio of businesses.
However, the Board recognises that the Group's lack of an off-shore banking
facility significantly constrains the services that can be offered, the range of
clients it can attract and the Group's ability to recruit suitable employees.
The Board believes the addition of such a facility will greatly improve the
ability to further develop the performance of the Group's banking operations.

Research has been undertaken by the Group to determine the best way of providing
an off-shore banking capability, including a review of different jurisdictions
and structures. Based on this research, the Board has concluded that the
establishment of a full-service banking operation in Switzerland is most
appropriate. In the light of this, the Group, working with advisers in Zurich,
has developed a detailed plan for the establishment of a Swiss based banking
operation.

A significant investment will be required in applying for a Swiss banking
licence and establishing the operation.

4. Principal Terms of the Placing and Offers
The Company proposes to raise up to approximately £4.3 million (£4.0 million net
of expenses) by the allotment and issue of up to 710,000 New Ordinary Shares at
600 pence per New Ordinary Share pursuant to the terms of the Placing and
Offers.

The Issue Price represents an 11.6 per cent. premium to the closing middle
market price of 537.5 pence per Ordinary Share on 20 March 2006, the last
dealing day before the announcement of the Placing and Offers.

The fundraising has been structured in the form of two offers so as to enable
the Company to raise the level of capital it requires without incurring an
obligation to produce a prospectus pursuant to the Prospectus Rules of the
Financial Services Authority and therefore avoiding significant additional cost,
while allowing Qualifying Shareholders to participate, should they so desire,
pro rata to their shareholdings.
The Placing and Offers comprise (1) a firm placing of 347,305 Placing Shares to
Flowidea; (2) a placing of 115,136 Vendor Shares with Cherrydene; (3) the First
Offer of up to 247,559 Offer Shares made by Hawkpoint on behalf of the Company
to Qualifying Eligible Shareholders, on a basis proportional to their
shareholdings, and (4) the Second Offer of up to 115,136 Vendor Shares made by
Cherrydene to Qualifying Institutional Shareholders, on a basis proportional to
their shareholdings, with a minimum subscription requirement of £35,000.

Pursuant to and subject to the terms and conditions of the Placing and
Underwriting Agreement, Flowidea has agreed to a firm placing of 347,305 Placing
Shares at the Issue Price and Cherrydene has agreed to a placing of 115,136
Vendor Shares at the Issue Price, representing approximately 49 per cent. and
16.2 per cent. respectively of the New Ordinary Shares to be issued under the
Placing and Offers, of which the Vendor Shares will be subject to the Second
Offer. In addition, the First Offer has been fully underwritten by Cherrydene.

Arrangements have been made with Hawkpoint, as agent on behalf of the Company,
subject to the fulfilment of the conditions set out below, to invite Qualifying
Eligible Shareholders to apply, under the First Offer, for an aggregate of up to
247,559 Offer Shares at the Issue Price, on the basis of:

1 Offer Share for every 20 Existing Ordinary Shares

registered in the names of the Qualifying Eligible Shareholders on the First
Record Date and so in proportion for any other number of Existing Ordinary
Shares then held.

Arrangements have also been made with Cherrydene which, subject to the
fulfilment of the conditions set out below, invites Qualifying Institutional
Shareholders to apply, under the Second Offer, for an aggregate of up to 115,136
Vendor Shares at the Issue Price, with a minimum subscription requirement of
£35,000, on the basis of:

1 Vendor Share for every 20 Existing Ordinary Shares

registered in the names of the Qualifying Institutional Shareholders on the
Second Record Date and so in proportion for any other number of Existing
Ordinary Shares then held.

Where appropriate, entitlements of Qualifying Shareholders will be rounded down
to the nearest whole number of Offer Shares or Vendor Shares, as the case may
be, and any fractional entitlements to Offer Shares or Vendor Shares, as the
case may be, that would otherwise have arisen, will be disregarded in
calculating Qualifying Shareholders' pro rata entitlements. Such fractional
entitlements will not be issued.

Qualifying Shareholders should note that the Offers are not a 'rights issue' and
that the Application Forms are not a negotiable document and cannot be traded.
Qualifying Shareholders should be aware that in the Offers, unlike in a rights
issue, any Offer Shares or Vendor Shares not applied for (or, under the terms of
the Offers not deemed to be applied for) or which the Company determines not to
allocate in accordance with the terms of the Offers, will not be sold in the
market or placed for the benefit of Qualifying Shareholders who do not apply
under the Offers. Furthermore, unless all Qualifying Shareholders apply for
their Offer Entitlements, the beneficial ownership of Mr Angest will increase.

5. Further information on the Placing and Offers

The Placing and Offers are conditional, inter alia, upon:
(i) the passing of the Resolution;
(ii) there being no substantial deterioration in the price and/or value of the

New Ordinary Shares between the date of the circular and Admission; and
(iii) Admission having become effective by not later than 8.00 a.m. on 28 April
2006 or such later time and/or date as the Company and Hawkpoint may agree (but,
in any event, not later than 8.00 a.m. on 11 May 2006).

If any of these conditions is not satisfied, the New Ordinary Shares will not be
issued under the Placing and Offers and all monies received by the Company's
receiving agent, Capita Registrars, will be returned to the applicants (at the
applicants' risk and without interest) as soon as possible thereafter.

Application will be made to the London Stock Exchange for the New Ordinary
Shares to be admitted to trading on AIM. It is expected that Admission will
become effective and that dealings in the New Ordinary Shares will commence at
8:00 a.m. on 28 April 2006.

6. Directors' Intentions
Flowidea has agreed to a firm placing of 347,305 Placing Shares at the Issue
Price and Cherrydene has agreed to a placing of 115,136 Vendor Shares which will
be the subject of the Second Offer. Furthermore, the First Offer has been fully
underwritten by Cherrydene.

The Directors (other than Mr Angest) who are Qualifying Eligible Shareholders
may or may not take up in full their Offer Entitlements for Offer Shares in the
First Offer.

It is the intention of the Board that the continued employment rights of the
employees of the Group will be safeguarded.

7. Rule 9 of the City Code

Rule 9 of the City Code provides that, inter alia, when any person who, taken
together with persons acting in concert with him, holds not less than 30 per
cent, but not more than 50 per cent. of the voting rights of a company, he must
make an offer to the holders of any class of equity share capital and any class
of voting non-equity share capital in which such person or persons acting in
concert holds shares should he, or any persons acting in concert with him,
acquire additional shares.

8. Consequences of Rule 9

As a result of the Placing and the underwriting of the First Offer by
Cherrydene, it is possible that Mr Angest's percentage interest in the Company
might increase above its current level of approximately 49 per cent. In this
circumstance, he would be obliged, in the absence of the consent of the Panel
and approval of the Independent Shareholders, to make an offer for the Existing
Ordinary Shares not, beneficially owned by him, in accordance with Rule 9 of the
City Code. This offer would need to be in cash and at the highest price paid in
the last twelve months.

Unless all Qualifying Shareholders apply for their Offer Entitlements in full,
Mr Angest's percentage in the Enlarged Share Capital will increase.

Mr Angest is prepared to support the Placing and Offers to ensure that the
Company receives all of the new capital that it is seeking to raise. However, he
would not do so if he might be obliged to make an offer under Rule 9. The Board
has accordingly consulted the Panel which has agreed, subject to the approval of
the Independent Shareholders, voting on a poll, to waive the obligation that
would otherwise arise under Rule 9 for Mr Angest to make a general offer for the
Ordinary Shares which Mr Angest does not already beneficially hold.

The eventual percentage interest of Mr Angest in the Enlarged Share Capital will
depend on the number of New Ordinary Shares for which valid applications are
received from Qualifying Shareholders under the Offers. However, under the terms
of the Offers, this percentage interest will not increase to more than 51.5 per
cent. of the Enlarged Share Capital. It should be noted that Mr Angest has no
intention of subsequently taking the Company private.

Shareholders should note that if, following the Placing and Offers, Mr Angest
holds over 50 per cent. of the total voting rights exercisable at general
meetings of Arbuthnot Banking Group, he will be free to acquire any number of
further Ordinary Shares without incurring any obligation under Rule 9 to make a
general offer to Shareholders.

Neither Mr Angest nor any person acting in concert with him, has dealt for value
during the period of 12 months preceding the date of the circular, nor intends,
prior to 27 April 2006, being the date of the EGM, to deal for value in relevant
securities of the Company.

9. Background on Mr Angest, Flowidea and Cherrydene

Mr Angest led a management buyout of Secure Trust (now renamed Arbuthnot Banking
Group PLC) in 1985 and became Chairman and Chief Executive of the Company. At
that time, he subscribed for a significant stake in the Company which he has
since maintained.

Mr Angest owns a significant part of his beneficial interest in the Company
through Flowidea, a company of which he is the 100 per cent. beneficial owner,
for which the main purpose is to hold nearly all Mr Angest's beneficial holding
in the Company.

Mr Angest is also the 100 per cent. beneficial owner of Cherrydene, a company
incorporated to mainly hold shares in the Company. Both Flowidea and Cherrydene
are non-trading companies, which are incorporated in the UK.

Other than his directorship of the Company and a number of its subsidiaries, Mr
Angest has no other material business interests.

10. Recommendations

As explained above, Mr Angest will not be voting on the Resolution at the EGM.
The Directors (excluding Mr Angest), who have been so advised by Hawkpoint,
consider that the Placing and Offers and the Resolution are fair and reasonable.
In providing advice to the Directors, Hawkpoint has taken into account the
Directors' commercial assessments.

The Directors (excluding Mr Angest) consider that it is in the best interests of
the Company and its Shareholders as a whole that the Company be able to proceed
with the Placing and Offers without Mr Angest incurring any obligation under
Rule 9 of the City Code.

The Directors (excluding Mr Angest) recommend that Shareholders vote in favour
of the Resolution, as they intend to do in respect of their own beneficial
holdings of Existing Ordinary Shares, representing in aggregate approximately
0.6 per cent. of the Issued Share Capital of the Company at the date of the
circular.

11. Despatch of circular to Arbuthnot Banking Group shareholders

A circular setting out details of the Placing and Offers and giving notice of an
Extraordinary General Meeting was despatched to Arbuthnot Banking Group
Shareholders today.

Enquiries:
Arbuthnot Banking Group PLC         Stephen Lockley         0207 012 2400
                                    Andrew Salmon

Hawkpoint Partners Limited          Paul Baines             0207 665 4500
                                    Lawrence Guthrie


                                   Appendix I

                     EXPECTED TIMETABLE OF PRINCIPAL EVENTS

First Record Date for White Application Forms under the First    5.00 p.m. on 17
Offer                                                                 March 2006

Second Record Date for Blue Application Forms under the Second   5.00 p.m. on 17
Offer                                                                 March 2006

Posting date of the circular, the Form of Proxy and the            31 March 2006
Application Forms

Latest time and date for receipt of Forms of Proxy for the       2.00 p.m. on 25
Extraordinary General Meeting                                         April 2006

Latest time and date for receipt of White Application Forms and  3.00 p.m. on 27
payment in full under the First Offer                                 April 2006

Latest time and date for receipt of Blue Application Forms and   3.00 p.m. on 26
payment in full under the Second Offer                                April 2006

Extraordinary General Meeting                                    2.00 p.m. on 27
                                                                      April 2006

Admission and commencement of dealings in the New Ordinary       8.00 a.m. on 28
Shares                                                                April 2006

CREST stock accounts credited with New Ordinary Shares in             4 May 2006
uncertificated form

Share certificates for New Ordinary Shares in certificated form    by 9 May 2006
despatched

This financial promotion is communicated by Arbuthnot Banking Group and the
Directors of Arbuthnot Banking Group accept responsibility for the information
contained in this financial promotion. To the best of the knowledge and belief
of the Directors (who have taken all reasonable care to ensure that such is the
case) the information contained in this financial promotion is in accordance
with the facts and does not omit anything likely to affect the import of such
information.

This financial promotion has been approved by Hawkpoint Partners Limited for the
purposes of section 21 of the Financial Services and Markets Act 2000. Hawkpoint
Partners Limited, which is authorised and regulated in the United Kingdom by the
Financial Services Authority, is acting exclusively for Arbuthnot Banking Group
in connection with the Placing and Offers and no-one else. Neither Hawkpoint
Partners Limited nor Arbuthnot Securities Limited, broker to Arbuthnot Banking
Group, will be responsible to anyone other than Arbuthnot Banking Group for
providing the protections afforded to customers of Hawkpoint Partners Limited or
Arbuthnot Securities Limited and will not be responsible for providing advice to
any such person in relation to the Placing and Offers or the contents of this
financial promotion or any other matter referred to herein.

The proposed Placing and Offers described in this financial promotion are not
being made to shareholders with a registered address in, or who are located in
any excluded territory. The New Ordinary Shares have not been, nor will they be,
registered under the United States Securities Act of 1933 (as amended), or under
the securities laws of any state of the United States or under the applicable
securities laws of any other Excluded Territory. The New Ordinary Shares may not
be offered or sold, directly or indirectly, in or into the United States or any
other Excluded Territory, or to or for the benefit of any national, resident or
citizen of any other Excluded Territory. There will be no public offer of
securities in the United States or any other Excluded Territory.

This financial promotion does not constitute an offer of, or the solicitation of
any offer to subscribe for or buy, any of the new ordinary shares to any person
in any jurisdiction to whom or in which such offer or solicitation is unlawful.
The distribution of this financial promotion in certain jurisdictions may be
restricted by law and therefore persons into whose possession this financial
promotion comes should inform themselves about and observe any such
restrictions. Any failure to comply with these restrictions may constitute a
violation of the securities laws of such jurisdiction.



Appendix I

DEFINITIONS

The following definitions apply throughout this announcement unless the context
requires otherwise:

'Act' or        the Companies Act 1985 (as amended)

'Companies Act'

'Admission'     the admission of the New Ordinary Shares to trading on AIM
                becoming effective in accordance with the AIM Rules
'AIM'           AIM, a market operated by the London Stock Exchange

'AIM Rules'     the rules of AIM as set out in the publication entitled 'AIM
                Rules for Companies' published by the London Stock Exchange from
                time to time

'Arbuthnot      Arbuthnot Securities Limited, the Company's broker
Securities'

'Associates'    has the meaning given to it in section 430E of the Act

'Blue           the blue application form for use by Qualifying Institutional
Application     Shareholders in respect of the Second Offer
Form'

'Capita         a trading division of Capita IRG plc
Registrars'

'Cherrydene'    Cherrydene UK Limited, a company (incorporated in England and
                Wales with registered number 5281934) beneficially owned
                entirely by Mr Angest, and whose registered office is at
                Arbuthnot House, 20 Ropemaker Street, London EC2Y 9AR

'City Code'     The City Code on Takeovers and Mergers

'CREST'         the computerised settlement system operated by CRESTCo Limited
                which facilities the transfer of title to shares in uncertified
                form

'Company' or    Arbuthnot Banking Group PLC
'Arbuthnot
Banking Group'

'Directors' or  the directors of the Company, at the date of this announcement,

'Board'         together with, where the context so requires, their families and
                persons connected with them (within the meaning of section 346
                of the Act)

'Enlarged Share the issued share capital of the Company as enlarged by the issue
Capital'        of New Ordinary Shares pursuant to the Placing and Offers

'Excluded       the United States, Canada, Japan, Australia the Republic of
Territories'    Ireland or South Africa

'Existing       the 14,234,219 Ordinary Shares in issue at the date of this
Ordinary        announcement
Shares'

'Extraordinary  the extraordinary general meeting of the Company to be held at
General         2.00 p.m. on 27 April 2006
Meeting' or
'EGM'

'First Offer'   the invitation to subscribe for Offer Shares at the Issue Price
                made by Hawkpoint, acting as agent for the Company, to
                Qualifying Eligible Shareholders

'First record   5.00 p.m. on 17 March 2006
Date'

'Flowidea'      Flowidea Limited, a company (incorporated in England and Wales
                with registered number 2463564) beneficially owned entirely by
                Mr Angest, and whose registered office is at Arbuthnot House, 20
                Ropemaker Street, London, EC2Y 9AR

'Form of Proxy' the form of proxy for use by Shareholders in connection with the
                EGM

'FSMA'          the Financial Services and Markets Act 2000 (as amended)

'Group'         the Company and its subsidiaries and associated undertakings

'Hawkpoint'     Hawkpoint Partners Limited, the Company's nominated adviser

'Independent    Shareholders other than Mr Angest and his Associates
Shareholders'

'Issue Price'   600 pence per Offer Share or 600 pence per Placing Share or 600
                pence per Vendor Share, as the case may be
'Issued Share   all Ordinary Shares in issue from time to time
Capital'

'London Stock   London Stock Exchange plc
Exchange'

'New Ordinary   up to 710,000 New Ordinary Shares to be issued pursuant to the
Shares'         Placing and Offers

'Offer          the maximum entitlement of each Qualifying Eligible Shareholder
Entitlement'    to subscribe for Offer Shares pursuant to the First Offer or the
                maximum entitlement of each Qualifying Institutional Shareholder
                to subscribe for Vendor Shares pursuant to the Second Offer, as
                the case may be

'Offers'        the First Offer and the Second Offer

'Offer Shares'  up to 247,559 New Ordinary Shares , the subject of the First
                Offer

'Ordinary       ordinary shares of 1 penny each in the capital of the Company
Shares'

'Overseas       Qualifying Shareholders with registered addresses in, or who are
Shareholders'   citizens or residents of jurisdictions outside the United
                Kingdom

'Panel'         the Panel on Takeovers and Mergers

'Placing'       the conditional firm placing of the Placing Shares with Flowidea
                and the conditional placing of the Vendor Shares with Cherrydene

'Placing and    the agreement between the Company, Flowidea, Cherrydene and
Underwriting    Hawkpoint, relating to the Placing and Offers
Agreement'

'Placing        347,305 New Ordinary Shares, the subject of the Placing with
Shares'         Flowidea

'Qualifying     Shareholders on the register of members of the Company on the
Eligible        First Record Date other than Shareholders with a registered
Shareholders'   address in any of the Excluded Territories, Mr Angest and his
                Associates and Qualifying Institutional Shareholders

'Qualifying     certain institutional Shareholders on the register of members on
Institutional   the Second Record Date who are able to meet the minimum
Shareholders'   subscription requirement of £35,000 under the Second Offer

'Qualifying     Qualifying Institutional Shareholders and Qualifying Eligible
Shareholders'   Shareholders

'Resolution'    the ordinary resolution to be proposed at the EGM

'Rule 9'        Rule 9 of the City Code

'Second Offer'  the invitation to acquire Vendor Shares at the Issue Price made
                by Cherrydene to Qualifying Institutional Shareholders

'Second Record  5.00 p.m. on 17 March 2006
Date'

'Securities     the US Securities Act of 1933 (as amended)
Act'

'Shareholder'   a holder of Existing Ordinary Shares

'UK' or 'United the United Kingdom of Great Britain and Northern Ireland
Kingdom'

'UKLA' or 'UK   the Financial Services Authority acting in its capacity as
Listing         competent authority for the purposes of the Financial Services
Authority'      and Markets Act 2000

'US' or 'United the United States of America, its territories and possessions,
States'         any state of the United States of America and the District of
                Columbia and all other areas subject to its jurisdiction

'Vendor Shares' 115,136 New Ordinary Shares, issued to Cherrydene pursuant to
                the Placing, which are the subject of the Second Offer

'White          the white application form for use by Qualifying Eligible
Application     Shareholders in respect of the First Offer
Form'


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