Brits rule on Wall Street: UK citizens have moved into senior positions at America's top financial institutions. Larry Black reports (CORRECTED)

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The Independent Online

THE British started coming in serious numbers in the 1970s and the 1980s. It began as a trickle of management trainees, recruited by the big American banks and brought to headquarters in New York. Then came a wave of eager MBA students to Harvard and the University of Chicago. After Big Bang in London, Wall Street firms started to hire Britons in earnest, and the numbers grew still further when UK banks and brokers began opening New York offices in the 1980s. Many of these guest-workers fell in love with Wall Street. Many never went home.

And many prospered mightily. After two decades of quiet infiltration, the British have arrived at the top of the Wall Street establishment. They hold senior positions at several of America's leading financial institutions, running huge mutual funds and serving as managing directors at investment banks such as Dillon Read, Morgan Stanley, Lehman Brothers and Bear Stearns.

At the pinnacle of this success stand three of the most powerful and influential men on Wall Street. Sir Dennis Weatherstone - who adopted US citizenship three years ago - became chief executive of JP Morgan, America's most profitable international bank, in 1990. Deryck Maughan was chosen in 1991 to head Salomon Brothers, one of the world's great bond trading houses, by the company's leading shareholder, Warren Buffet. And Michael Carpenter has been chief executive of Kidder Peabody, the blue-blood investment bank controlled by General Electric, America's biggest business conglomerate, since 1989.

It is probably easier for foreigners to prosper in the American melting pot than in most countries. Little comment was passed when Sir Dennis took over at JP Morgan, even though he was the first foreigner to head a major US bank. And many American bankers who have met Mr Carpenter will swear he is not English.

But it is no accident that of the numerous expatriate communities on Wall Street, the British is not only the biggest but also, in most respects, the most successful. The common language makes integration for Brits a relatively simple matter. The banking and trading culture of London and New York are also more alike than either financial centre is to, say, the rest of Europe or Japan. In commercial law and accounting, Britain and the US share roots. In short, even if the Special Relationship is pretty much a dead letter politically, it still has some meaning in financial markets.

Some parts of the market, however, are more welcoming than others. According to Dennis Lyons, the English-born director of Spencer Stuart, the international headhunter, large American banks - Morgan Stanley, Goldman Sachs, JP Morgan - are more likely to put Brits at or near the top than are brokerage houses such as Merrill Lynch or Shearson.

'Skills also seem to be more transferable in areas like trading, while corporate-finance-type relations depend much more on common cultures,' Mr Lyons adds. 'That's not to say that Brits can't bridge that gap, but people like to deal with people who are like them.'

Beyond that, it is very difficult to generalise about Wall Street's Brits, he says. Those in senior positions have arrived by very different routes: Sir Dennis, 62, the son of a London Transport clerk from Islington, worked his way up through the bank, joining as foreign exchange trader in 1946 at the age of 16. He was brought to New York 25 years later by the general manager of the London office, Lewis Preston - the man who would later be his predecessor as chief executive.

A self-made, unpretentious man who refuses to talk to the press about himself, Sir Dennis is happier in New York because there is 'less of a class distinction here than in the UK', a spokesman says. (He is, however, not entirely unappreciated in the old country. He is the only US businessman with a knighthood, and his naturalisation did not prevent his name from being bandied about last year as a successor to Robin Leigh-Pemberton as Governor of the Bank of England).

On the other hand, Mr Maughan, 45, the son of a coal miner from County Durham, admits that his success story is in large part the result of being in the right place at the right time. After working as an adviser to HM Treasury for 12 years, he joined Goldman Sachs in London in 1983. But his career went nowhere until he was hired as a salesman by Salomon Brothers and ended up in Tokyo, where the firm - on the verge of cashing in on its powerful derivatives products - had had a succession of management problems.

He performed admirably, arriving back at head office in New York in 1991, just in time to catch the eye of Mr Buffett, who had just purged Salomon's management suite of anyone associated with the firm's rigging of US Treasury auctions. (By then Mr Maughan's reputation had crossed the Atlantic and he was, rather implausibly, mentioned in 1991 as a potential candidate for the post of Chancellor of the Exchequer in the next Labour Government).

Michael Carpenter, 46, arrived by a third route, deciding to do an MBA at Harvard in 1973 after working for three years for ICI. Instead of returning to England, he took a job with the Boston Consulting Group, where he met GE's Jack Welch, who offered him a job in the group's business development and planning department in 1983. He played a role in a number of GE acquisitions during the 1980s - though not its costly purchase of Kidder in 1987 - and was chosen to turn the unit around two years later.

'The brain drain was the hot topic at the time I left for Harvard, and later I understood why,' says Mr Carpenter. 'My original plan was just to put in a few years (at Boston Consulting) and go back to the UK - until the first time I worked with a UK client.' He recommended an acquisition and warned that there was other interest in the property, but was told: 'It will take us six months just to study your recommendation.'

'Things are totally different now, of course, but that, in a nutshell, is the reason why I didn't go back.'

The success Mr Carpenter and his colleagues have enjoyed on Wall Street stands in sharp contrast to the experience of Americans who came to London after the Big Bang in the 1980s. London, according to Alan Benedict, another senior British executive on Wall Street, proved impenetrably clubby to most of the US expats, while New York 'is a much more outward-looking place' he says.

'An American who goes to London is almost inevitably there temporarily; he almost always intends to come back,' Mr Benedict says. 'But an Englishman in New York is a different phenomenon.'

It was not always thus. Only a couple of decades ago, the success of the two dozen other Britons who currently hold senior positions on Wall Street, was unthinkable. The merchant banks of the City of London may have financed American nation-building through the 19th century - Baring Brothers, for example, bankrolled the Louisiana Purchase in 1803, and Morgan itself was based in London until a century ago, when J Pierpont took over from his father, Junius. But this gave the British no automatic entree into Wall Street. For a long time, power and influence there eluded them, and other foreigners for that matter.

Not for want of trying, however. In 1952, Siegmund Warburg himself came to Wall Street at the invitation of the partners of Kuhn, Loeb - then America's second-ranking investment firm after Morgan Stanley - only to encounter tremendous resistance, and indeed outright snobbery, from his American counterparts. Offered the opportunity to modernise the complacent yet hugely profitable firm as one of its senior partners, SG Warburg was stymied - in part by Wall Street's patronising post-war attitude to British bankers, in part by a deeper clash of corporate cultures.

Although he was already a legend in London, his American colleagues thought him pretentious; for his part, he was appalled that merchant bankers should measure their success solely by their compensation. His attempts to create a more collegial structure drew sneers from the brash, macho Americans, who preferred doing business on the golf course.

Warburgs and Kuhn, Loeb parted ways in 1963. But 'Siggy' (as people in New York insisted on calling him) never quite abandoned his dreams of dominating Wall Street. He later established an ill-fated joint venture with a small Chicago firm, AC Becker, recruiting cultured and genteel bankers to run it. Wall Street in the end proved a terrible frustration and deception for the British banker given the best crack at infiltrating it.

'There was a constant clash of values,' says Ron Chernow, the author of both an award-winning study of the Morgan dynasty, The House of Morgan, and a new book, The Warburgs, which is to be published in the UK next month. 'But something clearly changed between the time of Siegmund Warburg's departure and Dennis Weatherstone's arrival in the early Seventies.'

One crucial change seems to have been the attitude of the British themselves - they are now more familiar with American practices and more willing to adapt to them. The Brits who have settled into Wall Street for good say they were attracted variously by opportunities unavailable in the UK, by the forthrightness of the business culture there, by the fierceness of the competition, and by the pace of the market.

'Stockbroking in London still has the luxury of relationship banking,' says James Remington Hobbs, chairman of Barings Securities, who spent a number of years working elsewhere in America before agreeing to head the bank's Latin American operations. 'That is absolutely not the case here.'

The market in New York is so professional, he says, that some fund managers screen all their sales calls through their voice-mail systems, avoiding unnecessary chit-chat about last night's football game. 'They have to learn about new products and markets extremely quickly,' he says. 'People here simply don't have time.'

One of those beguiled by the pace and professionalism of Wall Street is Alan Benedict, who is now, at 44, a managing director at Dillon Read. His career path is as close to typical of senior Wall Street Brits as it gets. An associate with Price Waterhouse in the early 1970s, he was hoping to join a British merchant bank. 'The classic story,' he says, 'but there wasn't much happening in the Euromarkets.'

Through a chance social encounter, he met the American running Dillon Read's London office, who later offered him a job as an associate in corporate finance. 'It was very strange for them to hire a Brit at the time. And once they had me, they realised I would much more use to them if I had some time in New York.'

The idea was for him to spend a year or two at head office and return to London. Instead he jumped to Salomon Brothers in New York in 1976. He founded Salomon's currency-swaps unit in 1978 as a means of helping clients such as Dupont and the Church Commissioners get around British exchange controls.

Salomon then sent him to Tokyo in 1985 - just before the arrival of Mr Maughan - and he returned to New York to run the firm's Far Eastern investment banking arm. In 1989, he returned to Dillon Read to help set up its Tokyo office; Japan has since cooled down, so now he is specialising in media banking - handling deals for media companies - the hottest business on Wall Street these days.

If Mr Benedict's career is representative of the Brits who caught the Wall Street boom in the 1970s, Bridget Macaskill's meteoric rise is more typical of the successes in the 1980s.

Now the president of Oppenheimer Management, America's seventh- largest marketer of mutual funds. Ms Macaskill, 43, had not worked in the financial service industry before 1983, when she found herself in New York without a job or a work permit. A one- time marketing director with Unigate, the UK foods group, she came to the States with her husband, who had been transferred there by a British commercial bank.

Oppenheimer had just been bought by Mercantile House, and she ended up doing some freelance consulting for them in the UK, helping to market the unit trust business they were establishing in Britain. Soon after, Oppenheimer's chairman suggested she set up a marketing department for the firm in the US.

'I very much had to be persuaded. I didn't think it was a very good idea,' says Ms Macaskill, speaking from her office at the World Trade Centre. She turned out to be a natural, rising up the ladder from assistant to the president, to sales manager, to chief operating officer.

In 1991, she was elevated to president as part of a dollars 150m ( pounds 98m) management buyout of the firm from British & Commonwealth Holdings, which had filed for bankruptcy the year before. With other senior executives, she controls 34 per cent of the dollars 20bn firm.

One American interviewer said recently that Ms Macaskill looked and sounded like the Princess of Wales, and like some other Brits on Wall Street, she believes that being British helps her in her business.

'When I stand up to give a speech to a group of potential customers, the very fact that I'm British and have a British accent works in my favour,' Ms Macaskill says. 'It's a leg up before you start.'

She also argues that a British education, despite its recent failings, still affords Brits superior oral and written communications skills.

Americans, some suggest, are pro- British to a fault. 'The key to success in business is being able to differentiate yourself,' argues one ex-patriate financier. 'If you have the same skills set as your competitors, but happen to have an accent, they'll tend to remember you.'

But most dispute this, suggesting that being British is irrelevant in a business-driven place such as Wall Street, and that an accent risks becoming a distraction. For those who have accepted a more complete Americanisation, however, such details are meaningless. Philip Keevil, the co- head of investment banking at SG Warburg in New York, is ironically probably the most American of the senior Brits on Wall Street - with the possible exception of Mr Carpenter who, like him, came to US finance via a Harvard MBA.

'I feel like the cat who lives among dogs, who looks like a cat but thinks he's a dog,' says Mr Keevil, 46, relaxing in the Warburg conference room high above mid-town Manhattan. 'I feel like an American.'

Mr Keevil joined Morgan Stanley's corporate finance department out of business school in 1975, then moved to Lazard Freres in New York as co-head of its new international mergers-and-acquisitions unit in 1977. In 1987, he was headhunted for his current job at Warburgs.

Warburgs had a very strong domestic client list but was losing international business to the likes of Morgan Stanley and Goldman Sachs. 'But Warburg had a hard time trying to persuade Americans to take the job,' he says. 'They were risk- averse and didn't understand Warburgs' qualities.'

He accepted the job on the day of the 1987 market crash. The Wall Street Journal even called him up afterwards to ask why on earth he had accepted the post.

'It was a chance for me to run my own show, and in the end the fact that I was a Brit was why I got hired,' Mr Keevil says. 'Though I still suspect they wanted an American.' In a sense, they got both.

Since then, Warburgs' New York office has attracted prestigious M&A deals, ranging from Grand Metropolitan's purchase of Pillsbury to Sea Containers, M&S's acquisition of Brooks Brothers, and the Ford-Jaguar deal.

'Things have become very, very competitive with Goldman Sachs and Morgan Stanley and JP Morgan,' he says. 'They're fighting like hell to keep us out of the US the way we're trying to keep them out of Europe.' Mr Keevil says he plans to stay in the US. 'There's only one job in the UK I'm interested in, and that's already filled.'

'All we want,' he says, waving at the Exxon skyscraper two blocks away - the home of Morgan Stanley - 'is to have the stature and size of the business in that building there.'

It is now 40 years since Mr Warburg himself last looked enviously at Morgan's franchise, and much has changed.

Wall Street and the City are much closer; the caricatures of civil Brits and cowboy Americans is seriously outdated.

And the demand for Britons on Wall Street seems likely to grow stronger. Firms in both places now need foreigners more than ever to raise capital, distribute products and compete for international clients. For Americans - suddenly driven by demands for the greater yields that can only be found offshore - this is a new and unfamiliar challenge. For Britons, saddled historically with an economy that requires them to think globally to survive, this is not news, making them all the more valuable to Wall Street firms.

'The international department in most Wall Street firms was the stepchild to domestic operations in the 1970s and 1980s,' argues Joan Zimmerman, one of the two American principles at the GZ Stephens executive recruitment firm on Wall Street. 'But it is precisely there that they now expect most of their growth in coming years.'

It is conceivable that we are approaching a time when English-speaking financial executives will be as interchangeable as industrial executives from countries such as the US, the UK, Canada, Australia and Ireland have already become.

And if executives can become interchangeable, what of the location of the head offices themselves? Morgan Stanley has already moved some of its top-line decision-making personnel outside the US, and its chairman recently suggested there could come a time when the firm's headquarters would be elsewhere.

Indeed, Mr Keevil muses, perhaps some day the centre of financial gravity could shift again.

'Just as JP Morgan decided it was time to relocate his bank to New York when he took the reins from JS Morgan in 1895, perhaps we'll see Dennis or one of his successors moving it back to London.'

Or maybe to Hong Kong. Or Frankfurt. Or Singapore.


We would like to apologise to Neil P Benedict, a managing director with Dillon Read, for wrongly calling him Alan Benedict in our article Brits Rule on Wall Street on 10 October.

(Photographs omitted)