ABRDN is a company that trades on the London Stock Exchange and is based in Cheltenham, England. It was formed as an investment banking firm when it was incorporated into a joint-stock company by two pioneering figures of the industry, Alfred Bird and Robert Decide. ABRDN merged with a banking institution also based in Gloucestershire called Llanelli Banking Company plc to form ABRDN Group plc. The company’s share price has risen since its formation but recently declined considerably to around half that value. This article analyzes ABRDN.
History
ABRDN’s history spans over 100 years. Stephen Bird incorporated it in the creation of investment banking firms. In this context, the term ‘investment bank’ refers to institutions that take deposits from other banks and lend on their account to generate profits for themselves (i.e., it is not their depositors’ money that they are investing).
Business Operations
ABRDN is an investment bank, meaning it is in the business of lending money or making short-term loans, known as ‘margin loans, to its customers. It loans these funds to its customers at interest rates set according to the ‘lending rate’ fixed by the Bank of England. ABRDN’s margin loan business is conducted through its subsidiary ABRDN Securities Ltd., a company incorporated in the Channel Islands, of which it owns approximately 65%.
These margin loans are extended to brokers (firms that buy goods for their clients and sell them on) who then sell them on as commodities. These ‘brokers’ are also known as commodity brokers or broker-dealers. To repay their loans in full, the commodity brokers return whatever profits they make an ABRDN which puts down its own money in the first place. ABRDN takes on other types of financing business in addition to its main lending business.
It provides project and corporate finance to customers, meaning that it helps companies raise funds by taking deposits from other banks (which, again, is not the depositors’ money) and then lending it to its account. Recently, ABRDN has expanded into managing assets for others through its subsidiary ABRDN Management Services Ltd. The company also has interests in fast food restaurants and property management businesses. Find out more about Investments firm