Fleming cements ties with Keswicks

News Analysis: Two of Britain's most powerful dynasties hope to revive an ailing bank

THE KESWICK family, one of the most powerful British dynasties to have made its fortunes in Hong Kong, yesterday cemented its tie with the Flemings, one of Britain's oldest banking families, in a complex deal which sees it increasing its stake in the City merchant bank Robert Fleming, from 5 per cent to 17 per cent.

Under the terms of the agreement struck between Robert Fleming and the Keswick's main Hong Kong investment vehicle Jardine Matheson, Robert Fleming will take full control of Jardine Fleming, its 28-year-old Far Eastern investment banking joint venture.

In return Jardine will receive pounds 40m in cash and new Robert Fleming shares, diluting the Fleming family members' stake from 35 per cent to just over 30 per cent. A second Jardine representative, Rodney Leach, will join Henry Keswick on the Robert Fleming board.

In a further tidying up exercise Fleming is also buying out Martin & Co, the South African stockbroker from their joint venture Fleming Martin.

The announcement coincided with a sharp fall in profits at Robert Fleming. They were down from pounds 91.1m in the same period last year to pounds 20.8m.

John Manser, the Robert Fleming chairman, yesterday hailed the deal as a great step forward. He said it would enable the firm to redeploy staff and capital more freely within the business and allow more scope for common systems.

"Quite a lot has changed in the 28 years since we set up Jardine Fleming," he said. "For one thing it is a more global world. It is also a world which works on a functional rather than regional basis."

However, the decision to increase the firm's exposure to Asia at a time when others are reigning back is brave. Unsurprisingly, there was an enthusiastic reaction in Hong Kong where most of the recent traffic has been in the other direction.

Jardine Fleming lost pounds 2.3m in the first half and despite its prominent position in the merger and acquisition advisory league tables - the investment bankers' Holy Grail - it has had to be pruned back as new issue activity has all but dried up.

Nor has the Keswicks' experience in the UK been particularly happy. They came to the rescue of Trafalgar House when it was nearly sunk by its investment in Davy, a North Sea engineering firm. The investment was not a success, and they sold out to Kvaerner, the Norwegian shipbuilding and construction group that was desperate for a UK base.

The Keswicks fared little better with their investment via their food industry group Dairy Farm in the cut-price retailer Kwik Save. With sales plummeting, Kwik Save merged with Somerfield earlier this year

When whispers first started in the City that something big was afoot at Robert Fleming, many observers expected more dramatic news, like a decision to put the firm up for sale or seek a stock market quotation.

Critics said that Robert Flemings is at a crossroads - over the last few weeks there have been a number of high-profile departures, including Tony Chambers, the chief executive of banking, and Patrick Gifford, the well-respected chairman of Fleming Investment Trust Management. The firm insists that the departures were amicable, but there is little doubt that there is unhappiness within the firm.

Some outside shareholders are also pushing for an exit. But the idea of floating the firm on the stock market or of selling out to a bigger outfit has been opposed by Mr Manser and William Garrett, the chief executive, both of whom have the family's support.

The firm's investment management business is doing well but according to insiders the advisory side of the business was loss-making in the first half. Mr Manser refuses to comment.

Many are wondering whether the decision to build up the equity research and advisory business globally in an attempt to challenge the Lazards and the Morgan Stanley's has been a mistake. Despite a good run several years ago, and a strong position in both Asia and South Africa, the firm's global position has been sliding.

Mr Gifford, for one, is said to have become increasingly frustrated at the way the asset management side was being milked to pay for the unrealistic ambitions of the investment bankers. But his plan to spin off the asset management side and sell the investment banking business did not find favour with the board.

There would be no shortage of buyers, however. ABN-Amro, the Dutch bank that owns Hoare Govett, JP Morgan, and Paribas, the French investment bank, have recently made approaches. All have been rebuffed. "I like hard times," said Mr Manser. "It sorts the men from the boys."

In a world of financial services giants, Fleming is a rarity - a firm that is not only owned by a family trust but where family members' views carry weight.

Around 12 Flemings are active in the business. Some oddities, such as the insistence on guests consuming only beer, not wine, have disappeared. But others remain.

Despite having been London-based since 1900 when the original Robert Fleming moved his investment trust business from Dundee, the firm still wears its Scottishness on its sleeve.

Its main non-family backers are Scottish institutions such as Baillie Gifford and Stewart Ivory. The firm also owns the most extensive private collection of Scottish art in existence.

It is a structure that many see as an anachronism which leaves them ill-equipped to cope with an increasingly competitive world. The unravelling of the Jardine joint venture has long been talked about and is sensible as far as it goes.

But there are those who fear it will only postpone the inevitable. "Flemings," said one frustrated non-family shareholder yesterday, "should be sold. It is punching way above its weight".

Sport
Mourinho lost his temper as well as the match
sportLiverpool handed title boost as Sunderland smash manager’s 77-game home league run
Voices
Sweet tweet: Victoria Beckham’s selfie, taken on her 40th birthday on Thursday
voices... and her career-long attack on the absurd criteria by which we define our 'betters', by Ellen E Jones
Arts & Entertainment
Billie Jean King, who won the women’s Wimbledon title in 1967, when the first colour pictures were broadcast
tv
News
Snow has no plans to step back or reduce his workload
mediaIt's 25 years since Jon Snow first presented Channel 4 News, and his drive shows no sign of diminishing
VIDEO
Life & Style
food + drinkWhat’s not to like?
Voices
Clock off: France has had a 35‑hour working week since 1999
voicesThere's no truth to a law banning work emails after 6pm, but that didn’t stop media hysteria
Arts & Entertainment
Maisie Williams of Game of Thrones now
tvMajor roles that grow with their child actors are helping them to steal the show on TV
Life & Style
Lana Del Rey, Alexa Chung and Cara Delevingne each carry their signature bag
fashionMulberry's decision to go for the super-rich backfired dramatically
Arts & Entertainment
Kingdom Tower
architecture
Life & Style
Sampling wine in Turin
food + drink...and abstaining may be worse than drinking too much, says scientist
Arts & Entertainment
Game of Thrones writer George R.R. Martin has been working on the novels since the mid-Nineties
books
News
Easter a dangerous time for dogs
these are the new ones. Old ones are below them... news
News
Brand said he
people
Voices
Actor Zac Efron
voicesTopless men? It's as bad as Page 3, says Howard Jacobson
Sport
Roger Federer celebrates his victory over Novak Djokovic in the Monte Carlo Masters
sport
Arts & Entertainment
The monster rears its head as it roars into the sky
film
Voices
For the Love of God (2007) The diamond-encrusted skull that divided the art world failed to sell for
its $100m asking price. It was eventually bought by a consortium
which included the artist himself.
voicesYou can shove it, Mr Webb – I'll be having fun until the day I die, says Janet Street-Porter
Have you tried new the Independent Digital Edition iPad app?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

1st Line Helpdesk Engineer Apprentice

£150.00 per week: QA Apprenticeships: This company has been providing on site ...

Telesales & Sales Support Apprentice

£221.25 per week: QA Apprenticeships: This company is a well established Inter...

Client Relationship Manager - SQL, Python

£40000 - £50000 per annum: Harrington Starr: Client Relationship Manager - SQL...

**Financial Services Tax**

£35000 - £50000 per annum: Pro-Recruitment Group: Take your chance to join the...

Day In a Page

How I brokered a peace deal with Robert Mugabe: Roy Agyemang reveals the delicate diplomacy needed to get Zimbabwe’s President to sit down with the BBC

How I brokered a peace deal with Robert Mugabe

Roy Agyemang reveals the delicate diplomacy needed to get Zimbabwe’s President to sit down with the BBC
Video of British Muslims dancing to Pharrell Williams's hit Happy attacked as 'sinful'

British Muslims's Happy video attacked as 'sinful'

The four-minute clip by Honesty Policy has had more than 300,000 hits on YouTube
Church of England-raised Michael Williams describes the unexpected joys in learning about his family's Jewish faith

Michael Williams: Do as I do, not as I pray

Church of England-raised Williams describes the unexpected joys in learning about his family's Jewish faith
A History of the First World War in 100 moments: A visit to the Front Line by the Prime Minister's wife

A History of the First World War in 100 moments

A visit to the Front Line by the Prime Minister's wife
Comedian Jenny Collier: 'Sexism I experienced on stand-up circuit should be extinct'

Jenny Collier: 'Sexism on stand-up circuit should be extinct'

The comedian's appearance at a show on the eve of International Women's Day was cancelled because they had "too many women" on the bill
Cannes Film Festival: Ken Loach and Mike Leigh to fight it out for the Palme d'Or

Cannes Film Festival

Ken Loach and Mike Leigh to fight it out for the Palme d'Or
The concept album makes surprise top ten return with neolithic opus from Jethro Tull's Ian Anderson

The concept album makes surprise top ten return

Neolithic opus from Jethro Tull's Ian Anderson is unexpected success
Lichen is the surprise new ingredient on fine-dining menus, thanks to our love of Scandinavian and Indian cuisines

Lichen is surprise new ingredient on fine-dining menus

Emily Jupp discovers how it can give a unique, smoky flavour to our cooking
10 best baking books

10 best baking books

Planning a spot of baking this bank holiday weekend? From old favourites to new releases, here’s ten cookbooks for you
Jury still out on Manchester City boss Manuel Pellegrini

Jury still out on Pellegrini

Draw with Sunderland raises questions over Manchester City manager's ability to motivate and unify his players
Ben Stokes: 'Punching lockers isn't way forward'

Ben Stokes: 'Punching lockers isn't way forward'

The all-rounder has been hailed as future star after Ashes debut but incident in Caribbean added to doubts about discipline. Jon Culley meets a man looking to control his emotions
Mark Johnston: First £1 million jackpot spurs him on

Mark Johnston: First £1 million jackpot spurs him on

The most prize money ever at an All-Weather race day is up for grabs at Lingfield on Friday, and the record-breaking trainer tells Jon Freeman how times have changed
Ricky Gervais: 'People are waiting for me to fail. If you think it's awful, then just don't watch it'

Ricky Gervais: 'People are waiting for me to fail'

As the second series of his divisive sitcom 'Derek' hits screens, the comedian tells James Rampton why he'll never bow to the critics who habitually circle his work
Mad Men series 7, TV review: The suits are still sharp, but Don Draper has lost his edge

Mad Men returns for a final fling

The suits are still sharp, but Don Draper has lost his edge
Google finds a lift into space will never get off the ground as there is no material strong enough for a cable from Earth into orbit

Google finds a lift into space will never get off the ground

Technology giant’s scientists say there is no material strong enough for a cable from Earth into orbit