Amidst the gunfire generated by Stephen Hester’s bonus — on which I’m glad to say he took my advice and did the decent thing, so like Stephen Wraysford at the end of Birdsong he deserves a few days’ rest — I was intrigued by the week’s other RBS story. Hester is reported to be selling the troubled bank’s corporate stockbroking arm, Hoare Govett, to Jefferies, a US securities house. This will be the third change of ownership in 30 years for a firm whose name is so redolent of the pre-Big Bang era that many of us had forgotten it still operates at all, albeit from the death ship which is RBS’s investment banking division. Its history is, in effect, the history of the modern City writ small.
In the post-war decades, Hoare & Co (before its 1970 merger with Govett) was the fiefdom of Kit Hoare — a City gent from the school they knocked down to build the old school, as it were. ‘A splendid pirate [who] would have boarded any ship’, according to a contemporary, he did business on a nod or handshake, never wrote anything down, and contrived to be on the inside of all the lucrative deals of his day — if necessary gathering intelligence by wandering the corridors of merchant banks, pretending to be lost.
Recognised with Cazenove and Rowe & Pitman as the elite of corporate brokers — those who act on behalf of blue-chip companies in their stockmarket dealings — Hoare Govett was the quickest to sell itself to a bank when new rules made that possible in the early 1980s. This was the ownership change that fathered the City-Canary Wharf complex we know today and launched its hitherto unstoppable remuneration spiral. In Hoare Govett’s case the buyer was Security Pacific from Los Angeles — which went down in the Californian real estate crash of 1992, was swallowed by Bank of America, and sold the broking firm to an ambitious Dutch group called ABN Amro.
ABN fell to the now former Sir Fred’s catastrophic RBS-led consortium bid in 2007, and the broker is now being passed on to Jefferies, a lesser-known New York player that has grown rapidly during the financial crisis by picking up business its larger competitors no longer want. But Hoare Govett’s staff probably won’t collect the City equivalent of £200 for passing Go this time round: the sale price is described as ‘nominal’. Not like 1982, when — one partner recalled in David Kynaston’s City history — the price offered by the eager Californians provoked ‘pound signs bouncing up and down behind the eyeballs’.
As the guns continue to rumble over a proposed £500 million bonus pot for managers below Hester, the pound-sign days may finally be over for anyone on the payroll of a bailed-out bank. And the mood is spreading even to entrepreneurial parts of the private sector. Who was quoted this week saying ‘Hopefully our actions will restore sanity to the vicious cycle of fat cat bonuses and accelerate the adoption of Vince Cable’s sensible proposals on executive pay’? No, not some bearded Lib Dem backbencher, but easyJet founder Sir Stelios Haji-Iannou berating the low-cost airline’s board of directors. There’s a sign of the times for you.
Alive and well
My New Year appeal for the most promising new (and nearly new) businesses spotted by readers yielded such an eclectic response that, last week’s foragers apart, it’s hard to identify themes. The exercise has nevertheless achieved its objective, by confirming that entrepreneurship and its most vital ingredients — optimism, stamina and imagination — are alive and well despite the prevailing gloom and scarcity of finance.
Nominations (still welcome, to email@example.com) have so far ranged from software design through low-carbon industrial processes to organic horticulture. I particularly wanted to hear about — and give a cheer for — small manufacturers, and so I begin with two that offer new takes on a consumer product dear to the hearts of Spectator readers, the bicycle. Rule Bikes (as in ‘Rule Britannia’) is a patriotically branded West Country enterprise which invites customers to design their own retro-chic town cycles using a choice of component and finishes, and gives 10 per cent of its profit to a charity to support serving and retired Royal Marines, some of whom it also employs. And Team Magnus is a husband-and-wife venture based in Perth offering robust children’s bikes (to a German design) as well as a range of other kit and clothing for healthy outdoor activity.
In a more industrial field, I was impressed by Sharda Glass, founded near Heathrow in 2006 by twentysomething Nick Sharda to provide solutions for all kinds of architectural glass requirements — curved, heated, coated for solar control, or bulletproof. And in the renewable energy sector, I was struck by ventures which generate power from two unlikely sources: teenagers’ feet and chocolate. Pavegen harnesses kinetic energy from footsteps on special floor panels: its showpiece is a self-lighting walkway in a 1,100-pupil grammar school in Kent, and it will shortly unveil an installation in the Westfield Stratford City shopping mall. Regenesis Bio Fuel has developed technology to produce bio-diesel fuel from food waste, including the surplus that confectionery manufacturers would otherwise pay to dispose of. Who’d have thought a ton of chocolate can be converted (using only 1,000 kilowatt-hours in the process) into 25,000 kWh of usable energy? No wonder it’s an aphrodisiac.
Finally, an Olympic comeback story sent in by my old friends at the Docklands Business Club. H. Forman & Son was a Stratford fish smokery that was among 250 local businesses forced to make way for the stadium site — but fourth-generation owner Lance Forman fought his corner and used his compensation money to build a stylish new factory, restaurant and event venue, Forman’s Fish Island, with ‘unrivalled Olympic views’ that are particularly sought after by high-paying broadcasters. He’s heading for a prosperous summer, as I hope all the nominees are, despite the double dip. Next week, high tech and biotech.