Guinness Mahon goes up for sale

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The Independent Online
Guinness Mahon, one of the oldest UK banking groups, has been put up for sale by its Japanese owner. As Lea Paterson reports, the sale could mark a return to UK ownership for the bank.

The Bank of Yokohama (BoY), which took full control of the UK bank in 1991, has "decided to focus primarily on its domestic Japanese business", according to Guinness Mahon. The bank said yesterday it was in discussions with a number of institutions, understood to include both domestic and international players.

A further announcement will be made in due course.

David Potter, Guinness Mahon's chief executive, said he did not intend to break up the group. Guinness Mahon includes Henderson Crosthwaite, the broker, and Guinness Flight Hambro Asset Management, a joint venture with Hambros, a rival banking group.

Mr Potter, who declined to provide details of potential bidders for the group, said: "We would like to see the business go to a financially strong owner who believes in the platform and the businesses we are in."

Analysts estimated Guinness Mahon's net asset value at pounds 75m, excluding Guinness's 44 per cent interest in Guinness Flight Hambro Asset Management.

Guinness Mahon was established in Ireland in 1836, opened London offices in the late 1870s and quickly grew into the one of the most respected City merchant banks. But the bank ran into difficulties in the late 1980s and the early 1990s and had to be bailed out by the BoY, which is reported to have injected more than pounds 200m into the group to restore it to financial health. Guinness Mahon returned to operating profit in 1993.

Market speculation yesterday focused on the identities of the likely bidders.

"There are a number of people in the running, including some well-rehearsed candidates for BZW," said one source close to the talks. Mr Potter confirmed that interested parties included groups which had approached the bank in the past.

Donaldson Lufkin & Jenrette, the US investment bank, Paribas, the French bank, and Societe Generale, the French bank which last month snapped up Hambros, were reportedly among the bidders for parts of BZW. BZW, the investment banking arm of Barclays Bank, was put up for sale last October, and eventually fell to Credit Suisse First Boston, the Swiss-American bank.

Mr Potter said the BoY's decision to sell was sparked by a strategic review last summer. He added the decision was taken prior to recent turmoil in the financial markets.

Guinness Mahon has a total of 572 employees in its asset management, private banking, broking and corporate finance divisions.

BoY is a leading Japanese retail bank and employs more than 6,000 staff.