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large increase of capital and this would not occur,’ resulting in the bank ‘losing our independence without acquiring any real additional strength’.
*** A You absolutely
don’t want to be the ones who sell out. There’s too much history. There are all
sorts of people I couldn’t look in the eye
century on, the 11th generation of partners is similarly reluctant to cash out. ‘You absolutely don’t want to be the ones who sell out,’ says Venetia, who became a partner in 1996 having worked at Barings bank. ‘There’s too much history. There are all sorts of people I couldn’t look in the eye – our customers, all our colleagues, the next generation. And what would you do? We’ve got this gem of a business that gives us the most amazing opportunities – why would I sell? Yes, you’d have a lot of money, but what would you do with it?’ Since the earliest days of Hoare’s, the
bank’s partners have sought to use its wealth to support good causes. Back in 1721 the second Hoare to lead the bank, the founder’s son Henry (known as ‘Good Henry’), was instrumental in the opening of the Westminster Infirmary, which offered free medical care. It was revolutionary, and the bank maintained connections with Westminster Hospital for the next 200 years. In 1985 the family founded the Golden Bottle Trust, which receives 10 per cent of the bank’s annual profits (it is known as ‘the extra partner’) and is committed to philanthropy and impact investing. In 2020 the bank, which charges its partners and employees to be ‘good bankers and good citizens’, donated £1.5 million to the trust. But it takes more than philanthropic zeal
to keep a family business together for so long. Fortunately, the governance of the firm is designed to keep it going – in two principal ways. First, the rule that only partners can be shareholders reduces the chance of individual shareholders losing interest if they are not closely involved. Second, having unlimited liability status means partners are personally exposed to risk. If a run-of-the-mill limited liability company or a plc loses money, losses are generally confined to the business. But C. Hoare & Co. partners would be on the hook, personally, if the company were to go into the red.
‘Because of our structure with unlimited
liability we are all active in the business and want to know what’s going on. I think that is very unusual,’ says Venetia, who sits on the bank’s lending committee. Unlimited liability works to the customers’ advantage too; when
the pilot of the plane faces the same peril as the passengers, it tends to focus the mind. As a result, when the global financial crisis struck, Hoare’s experienced a run to the bank. During his tenure as chief executive,
Alexander recalls people telling him the partners were mad to operate with unlimited liability. ‘Come 2008 they started looking for an honest banker with a clean balance sheet: the money came pouring in.’ The bank’s deposits increased by 21 per cent in 2008, followed by 16 per cent 2009. In both years the bank was profitable, too. Since unlimited liability means partners must depend on one another’s capabilities and performance to a degree rarely seen in other businesses, the recruitment of new partners takes on a special significance. It’s about ‘making sure that the people that join the partnership have the right culture, the right values, the right attitude to risk, and that you are happy for them to put their signature on a £10 million loan’, says Rennie. At just 35 he has the prospect of being a partner for several decades to come – which may be why he also emphasises the importance of getting along. ‘The other side of it,’ he says, ‘is then you want to really enjoy their company – for the next 35 years.’ ‘We spend a lot of time on succession planning – it’s like one of four items on our job description,’ explains Alexander, sitting in a wingback chair in the private family rooms above the ‘shop’, as the Fleet Street branch is called. ‘One would be to know the customers, another would be to know the staff, a third would be to know the risks we’re running, and the fourth would be succession.’ The partners keep in touch with the
family’s database of more than 2,500 Hoare cousins – all direct descendants of the founder – through arts and philanthropic events and a City Hoare network run by Rennie. ‘We have monthly minuted partners’ meetings and succession is an item on the agenda pretty frequently,’ adds Rennie. ‘If it wasn’t we would be neglecting one of the core things of being a family business. The critical part inside a family business is that you’ve succeeded when you are succeeded.’ It then becomes a question of talent.
‘Within the 3,000 or so cousins, you only need half a dozen but you want some bright ones,’ says Alexander. ‘So within the nepotism of a family business – a family business is nepotistic by definition – there is some meritocracy going on.’ As a result, parent-to- child succession is not a given. While partners Bella and Simon’s fathers were both
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