Henry Grunfeld
Encyclopedia
Henry Grunfeld was a prominent individual in the development of investment banking
and the growth of London
as a financial centre following the Second World War.
Grunfeld was co-founder of S.G. Warburg, which became the preeminent UK-based investment bank by the early 1990s and "the biggest force in post-world-war merchant banking". While the firm had been named after his colleague Siegmund Warburg, whose family
were already long established in banking in Germany
and the United States
, upon Grunfeld's death it was noted that "Warburg, Grunfeld and Company would have been the more accurate style".
) in the Prussian Province of Upper Silesia
to an assimilated Jewish family with longstanding interests in the Steel
and Chemicals industries. He was educated in Breslau and Berlin
and became prominent in the German Steel Industry after taking over the operations of his father's company, A. Niederstetter, a supplier of steel pipes, when aged just 20. He subsequently represented the Steel Industry in its negotiations with the German government. Later, Grunfeld had to confront critical problems posed by the great inflation
, industrial unrest and world depression
following the Wall Street Crash of 1929, and at the age of 27 he became closely involved in the aftermath of the 1931 banking crisis, serving on more than 20 creditor committees.
Following the rise of Hitler, in April 1934, Grunfeld was arrested without warrant or charge by the Gestapo
and jailed for fifty-four hours. He was able to use his status as an honorary Consul
of Spain
to avoid deportation to a concentration camp
. He fled to London with his family after the Night of the Long Knives
, and his family business was subjected to Aryanization
and plundered by the Nazis: after the application of the various Nazi flight capital
taxes and exchange controls
, almost all Grunfeld's family assets were confiscated and he arrived in the United Kingdom
with £4,000 (equal to 7.5% of the book value
of the company at its founding in 1898). Many members of his family remained in Germany and were killed during the Third Reich. (While Grunfeld was later highly active with post-war German industrial companies, he never returned to Berlin and made no post-war restitution
claim).
business, Grunfeld joined forces with Siegmund Warburg in the New Trading Company, which was established to help refugees
from Europe extract their money from their native country and invest it safely. After the outbreak of war, he avoided internment
as an enemy alien
by leaving his home every morning at 7am and walking around Hyde Park
- it was thought that the police typically made their arrests between 8am and 9am. He became a British subject in 1946.
The New Trading Company was renamed as S.G. Warburg and Company in 1946 and Grunfeld and Warburg developed its merchant banking business among emigrants to London and in Germany. The firm rose to international prominence after it pioneered the hostile takeover in the UK with the acquisition of British Aluminium by Reynolds and Tube Investments in 1959 and with the development of the Eurobond
market after 1963. Grunfeld was especially active with clients in the newspaper industry and in the establishment of commercial television
in the UK and pioneered the reverse takeover
in a transaction for Lord Thomson
. From 3 employees in 1937, S.G. Warburg had 15,000 employees in 40 countries and half of the FTSE 100 largest UK companies among its clients at the time of its acquisition by Swiss Bank Corporation
in 1995. Grunfeld took over chairmanship of the firm in 1964 and held it for 10 years, but remained active in the firm until his death in 1999. He rarely gave interviews but in 1987 warned that derivatives
could be the cause of a future financial crisis.
At S.G. Warburg, Grunfeld pioneered the use of graphology
as an employee selection tool in the UK. Outside the firm, he was an unofficial adviser on financial matters to Harold Wilson
's government.
Following his death the Henry Grunfeld Chaired Professorship in Investment Banking was established at INSEAD
, the European business school, currently occupied by Gabriel Hawawini, and the Henry Grunfeld Foundation was established at the ifs School of Finance.
Investment banking
An investment bank is a financial institution that assists individuals, corporations and governments in raising capital by underwriting and/or acting as the client's agent in the issuance of securities...
and the growth of London
London
London is the capital city of :England and the :United Kingdom, the largest metropolitan area in the United Kingdom, and the largest urban zone in the European Union by most measures. Located on the River Thames, London has been a major settlement for two millennia, its history going back to its...
as a financial centre following the Second World War.
Grunfeld was co-founder of S.G. Warburg, which became the preeminent UK-based investment bank by the early 1990s and "the biggest force in post-world-war merchant banking". While the firm had been named after his colleague Siegmund Warburg, whose family
Warburg family
The Warburg family is a financial dynasty of German Jewish origin, noted for their accomplishments in physics, classical music, art history, pharmacology, physiology, finance, private equity and philanthropy. They are believed to be descended from the Venetian Jewish del Banco family, in the early...
were already long established in banking in Germany
Germany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...
and the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, upon Grunfeld's death it was noted that "Warburg, Grunfeld and Company would have been the more accurate style".
Career
Grunfeld was born in Breslau (today WroclawWroclaw
Wrocław , situated on the River Oder , is the main city of southwestern Poland.Wrocław was the historical capital of Silesia and is today the capital of the Lower Silesian Voivodeship. Over the centuries, the city has been part of either Poland, Bohemia, Austria, Prussia, or Germany, but since 1945...
) in the Prussian Province of Upper Silesia
Upper Silesia
Upper Silesia is the southeastern part of the historical and geographical region of Silesia. Since the 9th century, Upper Silesia has been part of Greater Moravia, the Duchy of Bohemia, the Piast Kingdom of Poland, again of the Lands of the Bohemian Crown and the Holy Roman Empire, as well as of...
to an assimilated Jewish family with longstanding interests in the Steel
Steel
Steel is an alloy that consists mostly of iron and has a carbon content between 0.2% and 2.1% by weight, depending on the grade. Carbon is the most common alloying material for iron, but various other alloying elements are used, such as manganese, chromium, vanadium, and tungsten...
and Chemicals industries. He was educated in Breslau and Berlin
Berlin
Berlin is the capital city of Germany and is one of the 16 states of Germany. With a population of 3.45 million people, Berlin is Germany's largest city. It is the second most populous city proper and the seventh most populous urban area in the European Union...
and became prominent in the German Steel Industry after taking over the operations of his father's company, A. Niederstetter, a supplier of steel pipes, when aged just 20. He subsequently represented the Steel Industry in its negotiations with the German government. Later, Grunfeld had to confront critical problems posed by the great inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
, industrial unrest and world depression
Depression (economics)
In economics, a depression is a sustained, long-term downturn in economic activity in one or more economies. It is a more severe downturn than a recession, which is seen by some economists as part of the modern business cycle....
following the Wall Street Crash of 1929, and at the age of 27 he became closely involved in the aftermath of the 1931 banking crisis, serving on more than 20 creditor committees.
Following the rise of Hitler, in April 1934, Grunfeld was arrested without warrant or charge by the Gestapo
Gestapo
The Gestapo was the official secret police of Nazi Germany. Beginning on 20 April 1934, it was under the administration of the SS leader Heinrich Himmler in his position as Chief of German Police...
and jailed for fifty-four hours. He was able to use his status as an honorary Consul
Consul (representative)
The political title Consul is used for the official representatives of the government of one state in the territory of another, normally acting to assist and protect the citizens of the consul's own country, and to facilitate trade and friendship between the peoples of the two countries...
of Spain
Spain
Spain , officially the Kingdom of Spain languages]] under the European Charter for Regional or Minority Languages. In each of these, Spain's official name is as follows:;;;;;;), is a country and member state of the European Union located in southwestern Europe on the Iberian Peninsula...
to avoid deportation to a concentration camp
Nazi concentration camps
Nazi Germany maintained concentration camps throughout the territories it controlled. The first Nazi concentration camps set up in Germany were greatly expanded after the Reichstag fire of 1933, and were intended to hold political prisoners and opponents of the regime...
. He fled to London with his family after the Night of the Long Knives
Night of the Long Knives
The Night of the Long Knives , sometimes called "Operation Hummingbird " or in Germany the "Röhm-Putsch," was a purge that took place in Nazi Germany between June 30 and July 2, 1934, when the Nazi regime carried out a series of political murders...
, and his family business was subjected to Aryanization
Aryanization
Aryanization is a term coined during Nazism referring to the forced expulsion of so-called "non-Aryans", mainly Jews, from business life in Nazi Germany and the territories it controlled....
and plundered by the Nazis: after the application of the various Nazi flight capital
Capital flight
Capital flight, in economics, occurs when assets and/or money rapidly flow out of a country, due to an economic event and that disturbs investors and causes them to lower their valuation of the assets in that country, or otherwise to lose confidence in its economic...
taxes and exchange controls
Foreign exchange controls
Foreign exchange controls are various forms of controls imposed by a government on the purchase/sale of foreign currencies by residents or on the purchase/sale of local currency by nonresidents.Common foreign exchange controls include:...
, almost all Grunfeld's family assets were confiscated and he arrived in the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
with £4,000 (equal to 7.5% of the book value
Book value
In accounting, book value or carrying value is the value of an asset according to its balance sheet account balance. For assets, the value is based on the original cost of the asset less any depreciation, amortization or Impairment costs made against the asset. Traditionally, a company's book value...
of the company at its founding in 1898). Many members of his family remained in Germany and were killed during the Third Reich. (While Grunfeld was later highly active with post-war German industrial companies, he never returned to Berlin and made no post-war restitution
Restitution
The law of restitution is the law of gains-based recovery. It is to be contrasted with the law of compensation, which is the law of loss-based recovery. Obligations to make restitution and obligations to pay compensation are each a type of legal response to events in the real world. When a court...
claim).
Establishment of S.G. Warburg & Co.
Exiled in London, after a period of operating an independent factoringFactoring (finance)
Factoring is a financial transaction whereby a business job sells its accounts receivable to a third party at a discount...
business, Grunfeld joined forces with Siegmund Warburg in the New Trading Company, which was established to help refugees
Jewish refugees
In the course of history, Jewish populations have been expelled or ostracised by various local authorities and have sought asylum from antisemitism numerous times...
from Europe extract their money from their native country and invest it safely. After the outbreak of war, he avoided internment
Internment
Internment is the imprisonment or confinement of people, commonly in large groups, without trial. The Oxford English Dictionary gives the meaning as: "The action of 'interning'; confinement within the limits of a country or place." Most modern usage is about individuals, and there is a distinction...
as an enemy alien
Enemy alien
In law, an enemy alien is a citizen of a country which is in a state of conflict with the land in which he or she is located. Usually, but not always, the countries are in a state of declared war.-United Kingdom:...
by leaving his home every morning at 7am and walking around Hyde Park
Hyde Park, London
Hyde Park is one of the largest parks in central London, United Kingdom, and one of the Royal Parks of London, famous for its Speakers' Corner.The park is divided in two by the Serpentine...
- it was thought that the police typically made their arrests between 8am and 9am. He became a British subject in 1946.
The New Trading Company was renamed as S.G. Warburg and Company in 1946 and Grunfeld and Warburg developed its merchant banking business among emigrants to London and in Germany. The firm rose to international prominence after it pioneered the hostile takeover in the UK with the acquisition of British Aluminium by Reynolds and Tube Investments in 1959 and with the development of the Eurobond
Eurobond
A Eurobond is an international bond that is denominated in a currency not native to the country where it is issued. It can be categorised according to the currency in which it is issued. London is one of the centers of the Eurobond market, but Eurobonds may be traded throughout the world - for...
market after 1963. Grunfeld was especially active with clients in the newspaper industry and in the establishment of commercial television
Commercial Television
Commercial Television was the third free-to-air broadcast television station in Hong Kong. It first went on air in 1975, and ceased transmissions in 1978.-History:...
in the UK and pioneered the reverse takeover
Reverse takeover
A reverse takeover or reverse merger is the acquisition of a public company by a private company so that the private company can bypass the lengthy and complex process of going public...
in a transaction for Lord Thomson
Roy Thomson, 1st Baron Thomson of Fleet
Roy Herbert Thomson, 1st Baron Thomson of Fleet GBE was a Canadian newspaper proprietor and media entrepreneur.-Career:...
. From 3 employees in 1937, S.G. Warburg had 15,000 employees in 40 countries and half of the FTSE 100 largest UK companies among its clients at the time of its acquisition by Swiss Bank Corporation
Swiss Bank Corporation
Swiss Bank Corporation was a large integrated financial services company located in Switzerland...
in 1995. Grunfeld took over chairmanship of the firm in 1964 and held it for 10 years, but remained active in the firm until his death in 1999. He rarely gave interviews but in 1987 warned that derivatives
Derivative (finance)
A derivative instrument is a contract between two parties that specifies conditions—in particular, dates and the resulting values of the underlying variables—under which payments, or payoffs, are to be made between the parties.Under U.S...
could be the cause of a future financial crisis.
At S.G. Warburg, Grunfeld pioneered the use of graphology
Graphology
Graphology is the pseudoscientific study and analysis of handwriting, especially in relation to human psychology. In the medical field, it can be used to refer to the study of handwriting as an aid in diagnosis and tracking of diseases of the brain and nervous system...
as an employee selection tool in the UK. Outside the firm, he was an unofficial adviser on financial matters to Harold Wilson
Harold Wilson
James Harold Wilson, Baron Wilson of Rievaulx, KG, OBE, FRS, FSS, PC was a British Labour Member of Parliament, Leader of the Labour Party. He was twice Prime Minister of the United Kingdom during the 1960s and 1970s, winning four general elections, including a minority government after the...
's government.
Following his death the Henry Grunfeld Chaired Professorship in Investment Banking was established at INSEAD
INSEAD
INSEAD is an international graduate business school and research institution. It has campuses in Europe , Asia , and the Middle East , as well as a research center in Israel...
, the European business school, currently occupied by Gabriel Hawawini, and the Henry Grunfeld Foundation was established at the ifs School of Finance.