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.