THE ISSUES C. Hoare & Co.
partners, Alexander and the newest partner Amy have to go back 200 years or more to find a partner in their direct lines (although Alexander’s grandfather Bertram was the Fleet Street air warden during the war and is credited from saving the bank from being burned down). Alexander became a partner in 1987. He was working as a management consultant when he got a figurative tap on the shoulder: an invitation to lunch with the partners. ‘I didn’t realise it was a coded job offer,’ he says. ‘So they had to invite me back and lay it on a bit thicker.’ Still, though, he demurred. This prompted the senior partner at the time – Henry C Hoare – to invite him back for dinner. ‘[He] laid on more money and prestige, and I listened politely, and then his wife said, would I help with the washing-up. She laid on family, duty and honour – and hooked her fish.’ Alexander was made partner while still in
his twenties, and went on to become chief executive in 2000. Under his leadership the bank moved ‘off some very old-fashioned banking systems’ and on to a modern platform – what he describes as a ‘big call’. Another big call was building up the bank’s wealth management proposition – in part as ‘an alternative to interest rate margin’, according to Venetia. In 2016, however, a decision was taken to sell this business to Schroders. ‘Retail bankers deal in known quantities of debits and credits, balances,’ explains Alexander. ‘Investment bods deal with future speculations. They’re completely different mindsets, so merging them was difficult.’ As well as the cultural misalignment, the wealth management business required a lot of time, drawing the attention of partners away from the core business of banking. Moreover, the company’s headcount had swelled to around 500 – beyond the limit of around 400, where the partners felt they could still know – and trust – all the staff personally. For Annamaria Koerling, who ran the wealth management division, the decision to sell came down to a question: ‘Do we want to be a wealth manager with a bank attached?’ The answer was no. The sale netted £72 million for the
partners, and allowed Hoare’s to focus squarely on what it knows best: private banking. ‘It was a huge decision,’ recalls Venetia, who admits she was not at first on board with it. ‘It certainly took a year to come to a decision, if not longer.’ One unforeseen consequence was that the phone started
ringing from former competitors in wealth management who now felt happy to recommend C. Hoare & Co. as a banker. ‘One of my mantras, all my time here, has been “small is beautiful”,’ says Alexander, 59. ‘If you want to perpetuate a profitable family business you mustn’t let it get huge because the family won’t be able to deal with it.’ His other mantra, he says, is the ‘Kiss’ principle – keep it simple, stupid. ‘If you can keep the business small and simple you might just be able to hand it to the next generation.’ That said, Alexander, very much the present ‘senior partner’, admits that until recently he was concerned about succession. They had brought Rennie in – ‘the first millennial partner... a great ball of fire, fantastic’ – but though nearly 30 years younger, he is still a member of the 11th generation, the same as Alexander. ‘For some time I had this morbid fear of developing a good business and not being able to hand it on to anyone,’ Alexander says. ‘But I am now completely confident that the 12th generation will carry on.’
*** T
here’s something else the bank’s unique history provides: institutional memory. Rennie says the tenth generation had
collectively worked at the bank for 182 years. ‘When my uncle Henry started working as a partner, the other partners had worked through the Wall Street Crash and remembered it directly. Being able to suck in and take that knowledge of what happens in moments of market exuberance or market capitulation doesn’t mean that you will never make mistakes, but you’ve got reference points.’ Alexander, who describes that Henry –
Henry C Hoare, partner from 1959 until 2018 – as his mentor (‘he taught me everything I know’), notes that having business owners active in the organisation for 30-plus years is another strength. He and Venetia have a better understanding of interest rate structures than most of their staff because they’ve focused on it for so long. ‘There are lots of customers who I’ve been dealing with for decades,’ he adds. At the same time, there are some potential customers they wouldn’t
touch. With
unlimited liability hanging over their heads like the sword of Damocles, the partners see to it that at least one of their number meets each prospective client in order to vet them. How many have they rejected? ‘Thousands,’
If you want
to perpetuate a profitable family business you mustn’t let it get huge because the family won’t be able to deal with it
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