Kleinwort Benson

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Coordinates: 51°30′45″N 0°08′38″W / 51.51255°N 0.14378°W / 51.51255; -0.14378

Kleinwort Benson
Subsidiary
Industry Financial Services
Fate Merged with SG Hambros to form Kleinwort Hambros
Founded 1786
Defunct 2016
Headquarters London, United Kingdom
Owner Société Générale
Website www.kleinwortbenson.com

Kleinwort Benson was a leading investment bank that offered a wide range of financial services from offices throughout the United Kingdom and Channel Islands. Two families, the Kleinworts and the Bensons, founded two very different merchant banks in London. They merged in 1961 to create Kleinwort Benson Lonsdale, later Kleinwort Benson. Following its acquisition by Société Générale in June 2016, it was merged with SG Hambros, already a subsidiary of Société Générale, to form Kleinwort Hambros in November 2016.

History

The 20 Fenchurch Street building occupied by Kleinwort Benson. It was demolished in 2007

Kleinworts

The earliest known Kleinwort to go into banking was 24-year-old Heinrich Kleinwort, a grandfather of Sir Alexander Drake Kleinwort, 1st Baronet.[1] In 1786, Heinrich set up a partnership with Otto Mueller in Holstein to finance trade with England.[2] Kleinworts established a successful trading business in Cuba, profiting from the expansion of the H. Upmann and Sons cigar business.[3] Edward Cohen and James Drake joined the firm in the 1830s and for a while it was known as Drake, Kleinwort and Cohen; it was then renamed Kleinwort, Sons and Company in the 1880s.[4]

The firm helped finance Francisco Franco's coup d'état in Spain by approving a credit of 800,000 pounds at 4% interest on 15 September 1937. A month later Kleinworts agreed another loan of 1,500,000 pounds sterling at 3%.[5]

Robert Benson & Co.

In 1786, Robert Benson, a Quaker, joined with William Rathbone IV of the existing house of William Rathbone & Co. to form Rathbone & Benson, a Liverpool business trading mainly with America.[2] Over the course of the 19th century, the Benson family grew its wealth through railway finance in Britain, Europe and America.[2] For example it became part of a syndicate that marketed shares in the Illinois Central Railroad in 1852.[6]

In 1947 Robert Benson and Co. merged with Lonsdale Investment Trust (founded by Leo Lonsdale) to form Robert Benson, Lonsdale and Co.[7] The Benson family interest in the group was watered down but operational control of bank remained with its Chairman, Rex Benson.[8]

Kleinwort Benson

Kleinworts and Robert Benson, Lonsdale and Co. merged to form Kleinwort Benson Lonsdale in 1961.[2] The merged firm acquired the bullion dealer Sharps Pixley in 1966 thereby securing a seat on the London gold price fixing committee that met twice daily in the offices of N M Rothschild & Sons.[9] Kleinwort Benson worked on several major mergers and acquisitions at this time including the merger of Cadbury with Schweppes in 1969.[10]

The firm decided to enter the securities market buying Grieveson Grant, a leading stockbroker, in April 1986.[11] Although, like many other banks at the time, Kleinwort Benson contemplated buying a jobbing firm in order to get into that part of the market, in the end it was saved from having to do so by the defection of a number of senior market-makers from Wedd Durlacher Mordaunt as it was acquired by Barclays Bank.[12]

In the 1980s, Kleinwort Benson was a pioneer in privatisation. It managed the reprivatisation of British Aerospace, the first of the British Government's programme of disposals in 1981.[13] It also managed the flotation of Cable & Wireless in the same year.[14] It next advised on the privatisation of Associated British Ports in 1983.[15] It went on to advise the British Government on the sale of 50.2% of British Telecom, the largest ever share issue at the time, in 1984.[16] It assisted with the privatization of Enterprise Oil in the same year.[17] Important private sector transactions at that time included the takeover of Harrods by the Fayed brothers in 1984.[18]

The firm also worked on overseas privatisations advising the Italian government on the IPO of Enel in 1993.[19] In the United Kingdom it advised on Carlton Communications' £723 million takeover of Central Television in the same year.[20]

Dresdner Kleinwort

In 1995, Kleinwort Benson was acquired by Dresdner Bank and, as Dresdner Kleinwort, became its investment banking arm.[21] It added global reach through the acquisition of the US investment bank Wasserstein Perella in 2001 (from Bruce Wasserstein).[22] The Frankfurt branch of the bank was instrumental in initiating trading in emissions credits in 2003.[23] In 2004, the Russian government hired Dresdner Kleinwort to value Yukos's Yuganskneftegaz which was later sold to Russian state oil major Rosneft.[24] In January 2006, the bank became the target of a US$1.4 billion class action suit by six employees alleging bias and systematic discrimination against female workers.[25]

In December 2008 Commerzbank, which was in the process of acquiring Dresdner Bank,[26] decided to close Dresdner Kleinwort's Mergers & Acquisitions Unit.[27] Then in March 2009 it became clear that the office in Japan would close.[28] It also became clear that the capital markets and equities units would close and that advisory work would only be undertaken for Commerzbank's German clients.[29]

In February 2009 the Commerzbank management announced that no bonuses would be paid across the Commerzbank group including Dresdner Kleinwort. This was clarified to mean that Front Office staff would receive 10% of the bonus promised in December 2008 but support functions would receive their full bonus. This, together with issues regarding severance payments and guaranteed bonus payments, led to a number of lawsuits.[30] Jens-Peter Neumann, former head of Capital Markets sued in Germany in April 2009 for €1.5 million in severance pay.[31] Former senior managers Martin Newson, Eduardo Listorti and Michael Adams sued but settled out of court.[32] Other executives (Areski Iberrakene, Efstratios Hatzistefanis, Kaveh Taleghani and Stefan Guetter) won their bonus suits against the bank in August 2009.[33] Additional cases were brought by Dresdner Kleinwort executive committee members John McIntyre, Bertrand Pinel and Alberto Piedra in August 2009 seeking €11 million.[33] In September 2009, 72 former and current Dresdner Kleinwort front office employees sued for £30 million in disputed bonus payments.[34]

BHF Kleinwort Benson Group

Kleinwort Benson's offices at St George Street in London

In September 2009 Commerzbank decided to abandon use of the Dresdner Kleinwort name[35] and, in October 2009, sold the firm, by then renamed Kleinwort Benson, to RHJ International.[36]

In July 2011, RHJ International announced that its subsidiary, Kleinwort Benson, was in exclusive negotiations with Deutsche Bank regarding a potential acquisition of BHF Bank, one of Germany's strongest banking brands, with operations in private banking, asset management, financial markets and corporate banking. In September 2012, it announced that it had reached agreement with Deutsche Bank for Kleinwort Benson to acquire BHF Bank for €384 million.[37]

In November 2011 Saffron Tax Partners announced the acquisition of the private client tax compliance business from Kleinwort Benson.[38] In December 2012 London-based independent advice firm SK Financial bought about 1,000 clients from Kleinwort Benson that Kleinwort Benson felt it could no longer support profitably after the implementation of the Retail Distribution Review.[39] The bank moved to new premises at St George Street in London in 2012.[40]

RHJ International became "BHF Kleinwort Benson Group" in March 2015[41] and was acquired by Oddo & Cie in early 2016.[42] Then in June 2016, Société Générale acquired Kleinwort Benson from Oddo et Cie.[43] It merged the bank with its existing private banking subsidiary SG Hambros in November 2016 to form Kleinwort Hambros.[2]

Notable current and former employees

Business

Politics and public service

See also

References

  1. ^ "Heinrich Kleinwort". The Peerage. Retrieved 2 February 2018. 
  2. ^ a b c d e Thurston, Joshua (17 November 2016). "Kleinwort loses historic Benson name after mega-merger". City Wire. Retrieved 26 March 2017. 
  3. ^ Wake 1997, p. 79
  4. ^ "Gold, Mexican cotton and enemy debts: archives of Kleinwort Benson Group, merchant investment bankers". City of London. Retrieved 10 February 2018. 
  5. ^ "¿Quién puso el dinero para el golpe del 18 de julio y la Guerra Civil?". Publico. Retrieved 2 February 2018. 
  6. ^ Wilkins, p. 852
  7. ^ Wake 1997, p. 478
  8. ^ Jehanne Wake, "Benson, Sir Reginald Lindsay [Rex] (1889–1968)", Oxford Dictionary of National Biography (online edition, Oxford University Press, September 2004). Retrieved 8 January 2018.
  9. ^ "Brief History of Sharps Pixley as London Bullion Market Member". Chard. Retrieved 10 February 2018. 
  10. ^ "Obituary: Lord Rockley". The Times. 12 January 2012. Retrieved 10 February 2018. 
  11. ^ Wake 1997, p. 428
  12. ^ "Sir Nicholas Redmayne, Bt". The Telegraph. 26 November 2008. Retrieved 10 February 2018. 
  13. ^ "British Aerospace shares". New York Times. 5 February 1981. Retrieved 2 February 2018. 
  14. ^ Parker 2009, p. 459
  15. ^ "Associated British Ports". Hansard. 2 February 1983. Retrieved 2 February 2018. 
  16. ^ "British Telecom". Hansard. 16 November 1984. Retrieved 2 February 2018. 
  17. ^ Hoopes, Stephanie M. "The Privatization of UK Oil Assets 1977-87: Rational Policy-Making, International Changes and Domestic Constraints" (PDF). London School of Economics. p. 335. Retrieved 10 February 2018. 
  18. ^ "Harrod's new owner: Mohamed Al-Fayed; a quiet acquisitor is caught in the crossfire". New York Times. 8 September 1985. Retrieved 2 February 2018. 
  19. ^ "Merrill Lynch gets Italian role". The Independent. 6 December 1993. Retrieved 2 February 2018. 
  20. ^ "Kleinwort lifts payout after turnaround: 'Good feeling of confidence' running through bank, reports chairman". The Independent. 18 February 1994. Retrieved 2 February 2018. 
  21. ^ "Dresdner Bank Bids $1.5 Billion For Kleinwort". New York Times. 16 June 1995. Retrieved 2 February 2018. 
  22. ^ Dresdner buys Wasserstein ABC News, 18 September 2001
  23. ^ Alphagroup managers: Markus Huwener Archived August 12, 2009, at the Wayback Machine.
  24. ^ Yuganskneftegaz appraisal close to completion Red Orbit, 16 September 2004
  25. ^ $1.4bn sex discrimination law suit targets Dresdner Kleinwort Waserstein Daily News, 10 January 2006
  26. ^ "Commerzbank buys ailing Dresdner". BBC. 1 September 2008. Retrieved 2 February 2018. 
  27. ^ Commerzbank to Close Dresdner Kleinwort U.K. M&A Unit Bloomberg, 4 December 2008
  28. ^ Dresdner Kleinwort to cut most Japan staff Reuters, 17 March 2009
  29. ^ Dresdner Kleinwort cuts continue E-Financial News, 13 April 2009
  30. ^ Dresdner is sued by three more bankers over bonuses Bloomberg, 27 August 2009
  31. ^ Ex-Dresdner bankers sue over bonuses Bloomberg, 16 June 2009
  32. ^ Commerzbank ordered to pay £10m bonuses Daily Telegraph, 1 August 2009
  33. ^ a b Commerzbank sued for $49m over banker bonuses Bloomberg, 9 September 2009
  34. ^ Dresdner sued for millions in with held bonuses by 72 former traders The Times, 8 September 2009
  35. ^ Commerzbank drops Dresdner Kleinwort Benson Euroinvestor, 1 September 2009
  36. ^ Patrick, Margot (15 October 2009), "RHJ International to Acquire Kleinwort Benson From Commerzbank", Wall Street Journal, retrieved 2 February 2018 
  37. ^ "RHJ wins Chinese backing to buy Deutsche's BHF unit". Reuters. 20 September 2012. Retrieved 11 February 2018. 
  38. ^ "Kleinwort Benson tax compliance business bought by Saffron Tax Partners". Retrieved 2 February 2018. 
  39. ^ "IFA buys book of 1,000 Kleinwort clients in RDR clear-out". FT Advisor. Archived from the original on 14 July 2014. Retrieved 11 July 2014. 
  40. ^ "Kleinwort Benson Bank Limited". BCO. Retrieved 11 February 2018. 
  41. ^ "RHJ International: Extraordinary Shareholder's Meeting Update". GlobeNewswire News Room. Retrieved 2017-06-28. 
  42. ^ "Oddo completes capital raising ahead of BHF Kleinwort Benson buy". Reuters. 7 January 2016. Retrieved 11 February 2018. 
  43. ^ Yarker, Jonathan (7 June 2016). "Soc Gen completes Kleinwort Benson buy". City Wire. Retrieved 26 March 2017. 

Sources

Further reading

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