My racing correspondent, Captain Threadneedle, thought that banking and racing went together. He wanted Barclays to buy the Tote: perfect synergy, he thought, with matching systems, merged accounts, an overlapping customer base and a marketing slogan that would write itself: ‘You can bet on your overdraft with Barclays.’
He was, as we now know, before his time — and then the banks (Barclays included) took to betting on their own account, splashing out on doubles, trebles and accumulators, collecting piles of toxic betting slips and deservedly losing their boots. It has been left to Weatherbys, a very old name in racing, a new name in banking, to vindicate the Captain’s insight and to solve the equation.
It could be said that Weatherbys were looking after other people’s money before Diomed won the first official running of the Derby in 1780. Owners in those days would race their horses against one another in matches, and would trust a lawyer called James Weatherby to hold the stakes.
To this day, Weatherbys — now a seventh-generation family firm — is racing’s official stakeholder, collecting all the entry fees, distributing the prize money, and publishing the Racing Calendar and (since 1790) the General Stud Book. After a couple of centuries came a polite inquiry from the Bank of England: are you taking money on deposit? If so, don’t you need a banking licence? The family was not sure about the answer, but knew how to take a hint and an opening. This gave us Weatherbys Bank.
Racing is where this bank starts but is not where it stops. People in racing are likely to need an account, and are likely to be customers of Weatherbys already — if only when they buy a racecard, for Weatherbys prints them. If they want to insure their bloodstock, if they want their hands held through the labyrinth of VAT on race- horses, Weatherbys can help them.
So some sort of connection with racing brings most of the client base in, but this is not a punters’ bank or a punting bank — on the contrary.
Its big brothers in the high street, HSBC honourably excepted, have taken to lending more money than they can take in on deposit. They borrowed from one another to make up the difference, and by now they have spotted the catch: a bank which has run out of ready money may just as well shut its doors.
Weatherbys Bank, as a matter of principle, lends out less than half of what it takes in, which says something about its priorities: indeed, its most recent report and accounts show that it had lent out only 42 per cent of its deposits, with the rest of the money cautiously placed or invested.
Private banking means so many things to different purveyors. It can be no more than a new label (or even an old label) stuck on a high street façade, standing for steeper charges, smarter cheque-books and free pet insurance. At the opposite extreme, it can be the brass-plate on an imposing mansion, where the services range from money management to nightclub reservations, and the charges are steeper still. The clients may have hoped to be cut in on investment opportunities with exclusive hedge funds, or with the likes of Bernard Madoff. There will certainly be butlers to look after them.
Weatherbys seems to feel no need for such swagger. It is modestly housed on the outskirts of Wellingborough, equidistant from Ascot and Newmarket. This ought to reassure clients suspicious of swagger head offices, such as the Royal Bank of Scotland’s — where, we now learn, chief executive Sir Fred Goodwin insisted that the in-house cash machines should issue only banknotes which carried his own signature.
But for those who never go north of the Park, there is also a small Weatherbys townhouse in St James’s. The bank is small enough to be personal, declaring boldly on its website: ‘You will never speak to a “call centre”. You will speak to a “person” who will deal with your request there and then.’ And it starts from the assumption that its well-heeled customers would like to stay that way. ‘We work on the basis that most people want strategies that keep their wealth rather than making them wealthy.’
The idea that private banking might mean what it says — a top-notch bespoke banking service grounded on risk-averse instincts — is both nostalgic and novel. When Hans Baer, the veteran Swiss private banker, declared his doors open to customers here, he was asked what he would do for them. ‘First of all,’ he said, ‘we shall try not to lose their money, because if we do, they may not have any more.’ We have moved on from those days, and have now been reminded that bankers, too, can run clean out of money and prove not to have any more. Indeed, the bigger they were, the harder they could fall.
Publicly brooding on all this, Alexander Hoare, whose own family bank goes back more that three centuries, drew an unfashionable lesson. In family banks or in partnerships, he argued, the managers ran the same risks as the owners. In a banking megalith, a dealer could take a flyer, back a winner and collect a colossal bonus — or back a loser and lose all the shareholders’ money, not to mention the depositors’. Barings, ruined by a rogue dealer, was a case in point, he said: splitting ownership from management had proved fatal.
He modestly forbore to add that last year, when the megaliths were bleeding money, desperate would-be depositors were queueing up outside the offices of C. Hoare & Co at the sign of the Golden Bottle in Fleet Street — or that this had something to teach us about the nature of credit. It is, by derivation, a matter of belief — credit, so we learned at school, is the Latin word for ‘he believes’ — and belief may have nothing to do with size and everything to do with character.
Roger Weatherby, who runs his family’s bank, could be said to make the point for him: ‘We’re a privately owned business, so we have a much longer time-frame — so no commissions, no bonus payments, no sales targets… The sense of family is very important. The family’s money and in particular its good name is very much at stake. We don’t want to be the generation that loses it.’
So banking and racing do, after all, go together, as racing’s stakeholders have shown and as Captain Threadneedle foresaw. It might even in theory be possible to bet on your overdraft at Weatherbys, though, as its bankers politely observe, ‘we tend to lend against security’. Just don’t offer them Tote tickets.