Expert View: Day boys storm the wood-panelled halls of Cazenove

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The Independent Online

Lurking in the shadows behind the Centre Court at Wimbledon, I come across a very important gentleman, and bow in recognition.

Lurking in the shadows behind the Centre Court at Wimbledon, I come across a very important gentleman, and bow in recognition.

"Who the hell is that?" asks my companion.

"David Mayhew," I whisper, "the éminence grise of Cazenove."

He's not impressed. It is easy to forget that the City kingmaker at the Queen's broker is definitely not a household name. And yet he is a mighty power in this land.

A meeting in the offices at Cazenove is like nothing else in the City. The visitor encounters liveried flunkies padding around wood-panelled halls, and perfectly dressed public school boys, who somehow contrive to be polite and condescending at the same time. All this is a million miles from your standard US investment bank, red in tooth and claw.

But it now seems clear that the last independent UK house is raising the white flag to Wall Street. Caz itself is keeping its stiff upper lip firmly closed, but from others there appear to have been more behind-the-scenes briefings than in Downing Street, and the press is full of Mr Mayhew's attempt to preserve a "unique culture".

It is this that dominates the current, leaked, compromise plan. JP Morgan and Cazenove are forming a joint venture, with 50 Morgan staff being parachuted into the midst of the Caz squirearchy. Caz will get fresh capital, and access to Morgan's strength as a bond house. As an approach from Lehman was dismissed, one wag quipped, "It would appear that Gentlemen Prefer Bonds."

Some suggest this rather peculiar arrangement is a recognition of the problems JP Morgan has had in the past in preserving "unique cultures". Morgan - or rather, JP Morgan Chase Manhattan Chemical Manufacturers Hannover Texas Commercial National Bank of Detroit Bank One First Chicago, to give any Caz readers of this column the full pedigree - is no stranger to takeovers. The question is whether it is a stranger to preserving cultures. When it took over Robert Fleming, some observers claim 90 per cent of the staff were sacked.

Interestingly, the 50 Morgan parachutists are rumoured to be the surviving rump from Fleming's, which might make the cultural integration easier. On the other hand, no one at Morgan's is shy and retiring. One reporter described its joint venture with Cazenove as "svelte meets 'smack 'em in the gob'". American compensation culture breeds aggression - the 50 parachutists may earn as much as the entire 800 staff of Cazenove.

You might well wonder, why all the fuss about preserving a culture that is frankly long past its sell-by date? When I explained the term "diversity" to one of the old Caz partners, he replied: "You have to understand, Christopher, we have all kinds these days - blacks, women ... day boys." Even this is stretching it: I've never met anyone black or female at a senior level at Cazenove. Day boys I'm less able to verify.

The truth is, this contorted old-fashioned courtship is less about preserving the culture than about hanging on to Cazenove's corporate advisory roles to 50 of the FTSE 100 companies. When a chief executive gets that final call to be told the grey men in suits no longer need his services, it is Mr Mayhew on the other end of the phone. And it is he, or his colleagues, who organise the grey suits.

It is this key, delicate role, which is unique, which the Morgan men are keen to grasp and exploit - something those 50 companies must consider.

It would appear that what Philip Augar, Schroder's ex-boss, called the "death of gentlemanly capitalism" is about to reach its final chapter. For the fogeys at Cazenove this may be a long-overdue reality check. But it is also a sad day for British financial independence.

christopher.walker@tiscali.co.uk

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