Kleinwort Benson
Encyclopedia
Kleinwort Benson is a leading Private Bank that offers a wide range of financial services to private and corporate clients from offices throughout the United Kingdom
and Channel Islands
. The bank has its headquarters on St George Street in Mayfair, and is supported by seven UK regional and two Channel Island offices. In 2010, the company was rated as the top performing wealth manager in the Financial Times Private Client Wealth Management Survey.
to finance trade with England
. In the very same year, 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
. It was not until 1961 that the two firms merged to form Kleinwort Benson Lonsdale.
and France
as well as several British railways.
Robert R.'s son, known as Robert Benson jnr., moved the family business to London in 1852, setting up as Robert Benson & Son. In this period he also became involved in financing the rapid expansion of the American railway system, becoming part of a syndicate that marketed shares in the Illinois Central Railroad
direct to the British public.
The volatility of the markets that Robert Benson & Co. operated in eventually led to the insolvency of the company. In 1875 they went into voluntary liquidation, but managed to continue in business as Cross, Benson & Co. with a capital injection from Johnny Cross, an Englishman with a sound reputation on Wall Street
. On Cross's retirement in 1884 the remaining partners reverted the business to its former name.
in London, just round the corner from where Robert Benson's office was located. 50% of the capital for the business was provided by the Drake family, but they were sleeping partners. This did not stop the business being known as Drakes, however.
In 1863 the business moved to 20 Fenchurch Street
where its headquarters remained until 2006. In May 2006, the headquarters and most London-based staff moved to 30 Gresham Street
.
In June 1897, a young man called Samuel Sachs
arrived with a letter of introduction on behalf of his firm Goldman Sachs & Co.
of New York. The Kleinworts checked his references and agreed to go into business with the smaller company as Goldmans sought to expand their business beyond the Lower East Side
jewellers and merchants who were their principal clients.
The arrangement was beneficial to both firms. Goldman Sachs took full advantage of the access to European capital that their association with the Kleinworts brought them. In return, Kleinworts were tempted into their first new issue: the flotation of Sears Roebuck & Co. in 1906, arranged by Goldman Sachs and Lehmans
in New York with Kleinworts underwriting the London sales.
Rising star Mark Turner, who was the manager of Benson's subsidiary Kenterne, was seconded to Rio Tinto
(then a small mining concern) in 1946 as Managing Director and set in place its expansion plans. He remained as Finance Director of Rio Tinto as it expanded rapidly to become Rio Tinto Zinc but returned to Robert Benson & Co. in 1947. He lost out to Phil MacPherson when Rex Benson retired as Chairman in 1959 but Robert Benson Lonsdale was not to survive as an independent company for much longer.
s. In the late 1950s and early 1960s there was a spate of mergers in the City and it was natural in this climate for both Benson and Kleinworts to be considering a merger of some sort as a means of survival in an age when London banks were looking to provide a fuller service to their clients.
In the end it was Cyril Kleinwort who made the first approach. Both he and Mark Turner of Bensons were long-standing directors of Commercial Union and so knew each other professionally. As a very private firm, the size of Kleinworts was not well known in the City and so the hints dropped by Cyril to Mark Turner were enthusiastically taken up. On 17 March 1961 the two holding companies were made subsidiaries of new company called Kleinwort Benson Lonsdale of which the Kleinwort shareholders held 46% and the Benson shareholders 56%. The banking operation was named Kleinwort Benson Ltd.
The diversification of services offered by the bank was exemplified by its acquisition in 1966 of the bullion dealer Sharps Pixley
. This effectively gave Kleinwort Benson a seat on the London gold price fixing committee
that met twice daily in the offices of N M Rothschild & Sons
.
The 1960s saw a huge increase in the volume of mergers and acquisitions
and a corresponding increase in the level of fees that could be charged for advice on this activity. Kleinwort Benson's Corporate Finance division saw its revenues go from being only a small part of the bank's overall earnings to being at least as important as the banking division. At the start of the decade the bank was only a minor player in London M&A despite Robert Benson & Sons's history as a corporate finance firm. By the end of the decade, Kleinwort Benson was participating in some of the biggest deals on the London market (the Cadbury - Schweppes
merger, for instance).
so that the closed shop of stockbrokers
and stockjobber
s no longer had a monopoly of dealing in stocks. Kleinwort Benson, with some apprehension, decided to enter the securities market in part as a defensive move to prevent competitors with a distribution capability from eroding its corporate finance business. The move also enabled Kleinwort Benson to distribute the new issues it originated rather than relying on a third party. Although, like many other banks at the time, Kleinwort Benson contemplated buying a jobbing firm in order to get into the market, in the end they were 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. In April 1986 Kleinwort Benson itself acquired Grievson Grant, after originally being engaged to find an acquirer for the firm.
In July 1995 it was bought by Dresdner Bank
creating Dresdner Kleinwort Benson, later Dresdner Kleinwort
.
In 2006 Allianz bought Dresdner AG and Kleinwort Benson, as part of that deal, and becoming the parent of that group of key financial entities.
In January 2009 Dresdner AG was sold to Commerzbank
and again Kleinwort Benson was included in that deal and was made all the more attractive to the biggest financial provider in Germany. Due to the financial crisis this parentage was short lived as the German government, after providing an injection of cash to Commerbank stipulated that they must sell all non-German entities. This included Kleinwort Benson along with a number of other successful financial institutions who were the most profitable in the group.
Takeover
In October 2009, after much speculation over who would succeed in the race to buy Kleinwort Benson, RHJ International
became the new owners.
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...
and Channel Islands
Channel Islands
The Channel Islands are an archipelago of British Crown Dependencies in the English Channel, off the French coast of Normandy. They include two separate bailiwicks: the Bailiwick of Guernsey and the Bailiwick of Jersey...
. The bank has its headquarters on St George Street in Mayfair, and is supported by seven UK regional and two Channel Island offices. In 2010, the company was rated as the top performing wealth manager in the Financial Times Private Client Wealth Management Survey.
History
The earliest Kleinwort to go into banking was 24-year-old Hinrich Kleinwort who in 1786 set up a partnership with Otto Mueller in HolsteinHolstein
Holstein is the region between the rivers Elbe and Eider. It is part of Schleswig-Holstein, the northernmost state of Germany....
to finance trade with England
England
England is a country that is part of the United Kingdom. It shares land borders with Scotland to the north and Wales to the west; the Irish Sea is to the north west, the Celtic Sea to the south west, with the North Sea to the east and the English Channel to the south separating it from continental...
. In the very same year, Robert Benson, a Quaker
Religious Society of Friends
The Religious Society of Friends, or Friends Church, is a Christian movement which stresses the doctrine of the priesthood of all believers. Members are known as Friends, or popularly as Quakers. It is made of independent organisations, which have split from one another due to doctrinal differences...
, joined with William Rathbone IV of the existing house of William Rathbone & Co.
Rathbone Brothers
Rathbone Brothers Plc is one of the UK's largest and longest-established provider of high-quality, personalised investment management and wealth management services for private investors and trustees. This includes discretionary investment management, unit trusts, tax planning, trust and company...
to form Rathbone & Benson, a Liverpool
Liverpool
Liverpool is a city and metropolitan borough of Merseyside, England, along the eastern side of the Mersey Estuary. It was founded as a borough in 1207 and was granted city status in 1880...
business trading mainly with America
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
. It was not until 1961 that the two firms merged to form Kleinwort Benson Lonsdale.
Robert Benson & Co.
Robert Benson's son, Robert R. Benson, was the first member of the two families to be involved in railway finance, becoming part of a cartel formed in 1824 to promote a railway between Liverpool and Manchester. By the 1830s he had railway interests in BelgiumBelgium
Belgium , officially the Kingdom of Belgium, is a federal state in Western Europe. It is a founding member of the European Union and hosts the EU's headquarters, and those of several other major international organisations such as NATO.Belgium is also a member of, or affiliated to, many...
and France
France
The French Republic , The French Republic , The French Republic , (commonly known as France , is a unitary semi-presidential republic in Western Europe with several overseas territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans. Metropolitan France...
as well as several British railways.
Robert R.'s son, known as Robert Benson jnr., moved the family business to London in 1852, setting up as Robert Benson & Son. In this period he also became involved in financing the rapid expansion of the American railway system, becoming part of a syndicate that marketed shares in the Illinois Central Railroad
Illinois Central Railroad
The Illinois Central Railroad , sometimes called the Main Line of Mid-America, is a railroad in the central United States, with its primary routes connecting Chicago, Illinois with New Orleans, Louisiana and Birmingham, Alabama. A line also connected Chicago with Sioux City, Iowa...
direct to the British public.
The volatility of the markets that Robert Benson & Co. operated in eventually led to the insolvency of the company. In 1875 they went into voluntary liquidation, but managed to continue in business as Cross, Benson & Co. with a capital injection from Johnny Cross, an Englishman with a sound reputation on Wall Street
Wall Street
Wall Street refers to the financial district of New York City, named after and centered on the eight-block-long street running from Broadway to South Street on the East River in Lower Manhattan. Over time, the term has become a metonym for the financial markets of the United States as a whole, or...
. On Cross's retirement in 1884 the remaining partners reverted the business to its former name.
Drake, Kleinwort & Cohen
Hinrich Kleinwort's son, Alexander Friedrich Kleinwort established a successful trading business in Cuba, profiting from the expansion of the H. Upmann and Sons cigar business. In 1855, Alexander and his partner Edward Cohen set up a permanent base off Lombard StreetLombard Street, London
Lombard Street is a street in the City of London.It runs from the corner of the Bank of England at its north-west end, where it meets a major junction including Poultry, King William Street, and Threadneedle Street, south-east to Gracechurch Street....
in London, just round the corner from where Robert Benson's office was located. 50% of the capital for the business was provided by the Drake family, but they were sleeping partners. This did not stop the business being known as Drakes, however.
In 1863 the business moved to 20 Fenchurch Street
Fenchurch Street
Fenchurch Street is a street in the City of London home to a number of shops, pubs and offices. It links Aldgate at its eastern end with Lombard Street and Gracechurch Street to the west. To the south of Fenchurch Street and towards its eastern end is Fenchurch Street railway station...
where its headquarters remained until 2006. In May 2006, the headquarters and most London-based staff moved to 30 Gresham Street
Gresham Street
Gresham Street, in the City of London, is named after Thomas Gresham and runs from St. Martin's Le Grand near St Paul's Cathedral in the west, past Guildhall, to Lothbury in the east...
.
Kleinwort, Sons & Co.
James Drake died in 1870 and Edward Cohen withdrew his capital when he retired in 1883, allowing the Kleinworts to rename the firm Kleinwort, Sons & Co. at the start of 1884.In June 1897, a young man called Samuel Sachs
Samuel Sachs
Samuel Sachs was an American investment banker. He was born in the state of Maryland to Jewish immigrants from Bavaria, Germany. Sachs, along with his longtime friend Philip Lehman of Lehman Brothers, pioneered the issuing of stock as a way for new companies to raise funds...
arrived with a letter of introduction on behalf of his firm Goldman Sachs & Co.
Goldman Sachs
The Goldman Sachs Group, Inc. is an American multinational bulge bracket investment banking and securities firm that engages in global investment banking, securities, investment management, and other financial services primarily with institutional clients...
of New York. The Kleinworts checked his references and agreed to go into business with the smaller company as Goldmans sought to expand their business beyond the Lower East Side
Lower East Side
The Lower East Side, LES, is a neighborhood in the southeastern part of the New York City borough of Manhattan. It is roughly bounded by Allen Street, East Houston Street, Essex Street, Canal Street, Eldridge Street, East Broadway, and Grand Street....
jewellers and merchants who were their principal clients.
The arrangement was beneficial to both firms. Goldman Sachs took full advantage of the access to European capital that their association with the Kleinworts brought them. In return, Kleinworts were tempted into their first new issue: the flotation of Sears Roebuck & Co. in 1906, arranged by Goldman Sachs and Lehmans
Lehman Brothers
Lehman Brothers Holdings Inc. was a global financial services firm. Before declaring bankruptcy in 2008, Lehman was the fourth largest investment bank in the USA , doing business in investment banking, equity and fixed-income sales and trading Lehman Brothers Holdings Inc. (former NYSE ticker...
in New York with Kleinworts underwriting the London sales.
Robert Benson Lonsdale
In 1947, Robert Benson & Co. merged with Lonsdale Investment Trust to form Robert Benson Lonsdale. This move doubled the bank's capital base to £800,000 and enabled it to participate in larger deals. The Benson family interest in the group was watered down to 27% (the Lonsdale family owned 63%), but operational control of bank remained with its Chairman Rex Benson.Rising star Mark Turner, who was the manager of Benson's subsidiary Kenterne, was seconded to Rio Tinto
Rio Tinto Group
The Rio Tinto Group is a diversified, British-Australian, multinational mining and resources group with headquarters in London and Melbourne. The company was founded in 1873, when a multinational consortium of investors purchased a mine complex on the Rio Tinto river, in Huelva, Spain from the...
(then a small mining concern) in 1946 as Managing Director and set in place its expansion plans. He remained as Finance Director of Rio Tinto as it expanded rapidly to become Rio Tinto Zinc but returned to Robert Benson & Co. in 1947. He lost out to Phil MacPherson when Rex Benson retired as Chairman in 1959 but Robert Benson Lonsdale was not to survive as an independent company for much longer.
Kleinwort Benson Limited
Mark Turner remained keen for Bensons to expand away from new issues and investments into the traditional merchant banking activity of acceptance creditAcceptance credit
An acceptance credit is a type of letter of credit that is paid by a time draft authorizing payment on or after a specific date, if the terms of the letter of credit have been complied with. There are two types of acceptance credit, confirmed and unconfirmed...
s. In the late 1950s and early 1960s there was a spate of mergers in the City and it was natural in this climate for both Benson and Kleinworts to be considering a merger of some sort as a means of survival in an age when London banks were looking to provide a fuller service to their clients.
In the end it was Cyril Kleinwort who made the first approach. Both he and Mark Turner of Bensons were long-standing directors of Commercial Union and so knew each other professionally. As a very private firm, the size of Kleinworts was not well known in the City and so the hints dropped by Cyril to Mark Turner were enthusiastically taken up. On 17 March 1961 the two holding companies were made subsidiaries of new company called Kleinwort Benson Lonsdale of which the Kleinwort shareholders held 46% and the Benson shareholders 56%. The banking operation was named Kleinwort Benson Ltd.
The diversification of services offered by the bank was exemplified by its acquisition in 1966 of the bullion dealer Sharps Pixley
Sharps Pixley
Sharps Pixley was formed through the merger of two of London's leading gold dealers, Sharps Wilkins and Pixley & Abell. It was acquired by Kleinwort Benson in 1966 largely at the behest of the Bank of England who needed a stable parent for a firm that played an important part in the fixing of the...
. This effectively gave Kleinwort Benson a seat on the London gold price fixing committee
Gold Fixing
The London gold fixing or gold fix is the procedure by which the price of gold is determined twice each business day on the London market by the five members of The London Gold Market Fixing Ltd, on the premises of N M Rothschild & Sons...
that met twice daily in the offices of N M Rothschild & Sons
N M Rothschild & Sons
N M Rothschild & Sons is a private investment banking company, belonging to the Rothschild family...
.
The 1960s saw a huge increase in the volume of mergers and acquisitions
Mergers and acquisitions
Mergers and acquisitions refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling, dividing and combining of different companies and similar entities that can help an enterprise grow rapidly in its sector or location of origin, or a new field or...
and a corresponding increase in the level of fees that could be charged for advice on this activity. Kleinwort Benson's Corporate Finance division saw its revenues go from being only a small part of the bank's overall earnings to being at least as important as the banking division. At the start of the decade the bank was only a minor player in London M&A despite Robert Benson & Sons's history as a corporate finance firm. By the end of the decade, Kleinwort Benson was participating in some of the biggest deals on the London market (the Cadbury - Schweppes
Cadbury Schweppes
Cadbury is a confectionery company owned by Kraft Foods and is the industry's second-largest globally after Mars, Incorporated. Headquartered in Uxbridge, London, United Kingdom, the company operates in more than 50 countries worldwide....
merger, for instance).
Big Bang
In October 1986, the City of London was deregulated overnightBig Bang (financial markets)
The phrase Big Bang, used in reference to the sudden deregulation of financial markets, was coined to describe measures, including abolition of fixed commission charges and of the distinction between stockjobbers and stockbrokers on the London Stock Exchange and change from open-outcry to...
so that the closed shop of stockbrokers
Stock broker
A stock broker or stockbroker is a regulated professional broker who buys and sells shares and other securities through market makers or Agency Only Firms on behalf of investors...
and stockjobber
Stockjobber
Stockjobbers were institutions that acted as market makers in the London Stock Exchange. Prior to "Big Bang" in 1986, every stock traded on the Exchange passed through a jobber's book, where they acted as intermediaries between stockbrokers, who were in turn not permitted to be market makers...
s no longer had a monopoly of dealing in stocks. Kleinwort Benson, with some apprehension, decided to enter the securities market in part as a defensive move to prevent competitors with a distribution capability from eroding its corporate finance business. The move also enabled Kleinwort Benson to distribute the new issues it originated rather than relying on a third party. Although, like many other banks at the time, Kleinwort Benson contemplated buying a jobbing firm in order to get into the market, in the end they were 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. In April 1986 Kleinwort Benson itself acquired Grievson Grant, after originally being engaged to find an acquirer for the firm.
In July 1995 it was bought by Dresdner Bank
Dresdner Bank
Dresdner Bank AG was one of Germany's largest banking corporations and was based in Frankfurt. It was acquired by competitor Commerzbank in December 2009.- 19th century :...
creating Dresdner Kleinwort Benson, later Dresdner Kleinwort
Dresdner Kleinwort
Dresdner Kleinwort was a British-based investment bank: it disappeared as a brand from the world of investment banking in September 2009, when its remaining businesses adopted the Commerzbank branding.-History:...
.
In 2006 Allianz bought Dresdner AG and Kleinwort Benson, as part of that deal, and becoming the parent of that group of key financial entities.
In January 2009 Dresdner AG was sold to Commerzbank
Commerzbank
Commerzbank AG is the second-largest bank in Germany, after Deutsche Bank, headquartered in Frankfurt am Main.-Activities:Commerzbank is mainly active in commercial bank, retail banking and mortgaging. It suffered reversals in investment banking in early 2000s and scaled back its Securities unit...
and again Kleinwort Benson was included in that deal and was made all the more attractive to the biggest financial provider in Germany. Due to the financial crisis this parentage was short lived as the German government, after providing an injection of cash to Commerbank stipulated that they must sell all non-German entities. This included Kleinwort Benson along with a number of other successful financial institutions who were the most profitable in the group.
Takeover
In October 2009, after much speculation over who would succeed in the race to buy Kleinwort Benson, RHJ International
RHJ International
RHJ International is a holding company based in Belgium. The company, previously known as Ripplewood Holdings Japan, was a private equity fund run by Ripplewood Holdings prior to being listed on the Euronext. Timothy C. Collins, the founder of Ripplewood, is the company's largest shareholder and...
became the new owners.
Privatisations, flotations, and other major deals
- 1981 — Managed the reprivatisation of British AerospaceBritish AerospaceBritish Aerospace plc was a UK aircraft, munitions and defence-systems manufacturer. Its head office was in the Warwick House in the Farnborough Aerospace Centre in Farnborough, Hampshire...
, the first of the British Government's programme of disposals - 1981 — Managed the flotation of Cable & WirelessCable & WirelessCable & Wireless Worldwide PLC is a global telecommunications company headquartered in Bracknell, United Kingdom. Cable & Wireless specialises in providing communication networks and services to large corporates, governments, carrier customers and resellers...
- 1984 — Advised the British Government on the sale of 50.2% of British Telecom, the largest ever share issue at the time
- 1984 — Advised on HarrodsHarrodsHarrods is an upmarket department store located in Brompton Road in Brompton, in the Royal Borough of Kensington and Chelsea, London. The Harrods brand also applies to other enterprises undertaken by the Harrods group of companies including Harrods Bank, Harrods Estates, Harrods Aviation and Air...
takeover by the FayedMohamed Al-FayedMohamed Abdel Moneim Al-Fayed is an Egyptian businessman and billionaire. Amongst his business interests are ownership of the English Premiership football team Fulham Football Club, Hôtel Ritz Paris and formerly Harrods Department Store, Knightsbridge...
brothers - 1993 — Advised on Carlton CommunicationsCarlton CommunicationsCarlton Communications was a British media company. It was led by Michael Green and listed on the London Stock Exchange from 1983 until 2 February 2004, when it taken over by Granada plc to form ITV plc with Carlton gaining 32% of the new company....
' £723m takeover of Central Television