London’s oldest private bank has agreed the sale of its wealth business for undisclosed financial terms. Matthew Hardeman reports.
Schroders-owned Cazenove Capital Management has reached a deal with C. Hoare & Co to acquire its wealth management arm for an undisclosed sum.
The buy follows a six-month negotiation stretch between the two firms, which is expected to see some 1,800 clients and £2.2 billion of discretionary assets under management (recorded as of June 2016) move to Cazenove. Cazenove, which manages some £33.8 billion globally, expects to complete the transaction by mid-February next year and increase the size of Schroders’ UK wealth management arm by around 10 per cent.
C. Hoare’s wealth business is expected to transfer to Cazenove’s HQ in Moorgate upon completion of the deal, and assume its brand. It is understood that the private bank, which is also London’s oldest (it has served HNW and UHNW clients for more than 300 years), will still do business under the C. Hoare banner.
C. Hoare’s head of wealth, Annamaria Koerling, is set to step down from her executive role on completion of the agreement. She has been offered a non-executive director slot at Schroders & Co, pending regulatory approval. Most of C Hoare’s 30 client-facing team members are expected to remain with the firm.
Peter Harrison, group chief executive at Schroders, says he sees a ‘strong fit’ between the two businesses, thanks to what he calls a shared ‘culture of client focus and exemplary client service’: ‘This acquisition of its UK wealth management business grows our business in this area. I am confident that the relationship will create long-term value and benefits for clients, shareholders and employees.’
Cazenove chief executive Andrew Ross confirmed at the end of last year that his firm was on the hunt for acquisitions after its sale to Schroders for £424 million back in July 2013.
He told one industry journal that he expected further consolidation in the market, due to downward pressure on regulations, technology and fees. This, he said, would play to the bigger players’ strengths as 'scale has benefits in a way it never has before in wealth management'.
Commenting on the transaction, Ross continued: ‘We believe the combination of our two businesses will bring significant benefits and enhanced opportunities for our clients... The complementary fit between our two firms, the strong shared service culture, long-term thinking and established heritage of both businesses make this an ideal match.’
C. Hoare & Co partner and director Alexander Hoare believes the deal will free up the firm to re-focus on its private banking offering, which manages around £4 billion of assets, after spending a decade expanding into new wealth offerings. The bank first acquired the wealth arm close to 20 years ago.
Increasing regulatory pressure was a major factor contributing to the move, he added, with C. Hoare being monitored by both the Prudential Regulation Authority and the Financial Conduct Authority.
He said in a statement: ‘We are very proud of the wealth management business that we have built over the last decade and we are keen for it to continue to flourish... To do this will require growing scale and investment which we believe will best be achieved as part of a larger and deeply experienced wealth management business, backed by the resources required to grow.’
‘We are acutely conscious of the importance of this decision and of the need to make sure the requirements of our wealth management customers continue to be met and that they are happy with these new arrangements. We are committed to ensuring that the transfer is as seamless as possible and there is no interruption in service,’ he said.
‘Our wealth management customers will of course be able to keep their existing banking arrangements with us. One benefit of this transaction is that it will allow us to concentrate on the core business of banking to ensure we continue to offer a top banking service, as we have done for many years.’
The bank is set to invest further in its tech offering as part of the effort. It recently launched a smartphone app for clients, and is understood to be re-evaluating its online banking platform.