Crises of the past

JAMES BETHELL

It is not as old as Barings, nor as blue-blooded as Cazenove nor as pukka as Flemings, but Kleinwort Benson is still one of the City's grandest names.

Formed in 1961, the company became a powerhouse of British merchant banking in the 1980s. As skilful leader of the 1984 privatisation of British Telecom, it was the Government's favourite financial adviser, handling British Gas and electricity flotations.

The generous flow of government fees distracted the company from corporate clients, and by the 1990s, the company was dangerously off track. The Gulf War hit its badly managed placing of shares in Premier Consolidated Oilfields and the company lost pounds 34m. The loss of prestige was immeasurable.

As shares hit a low, the company sought refuge in a Franco-German alliance with BNP and Dresdner bank. Staff began to leave and there was a year- long crisis of leadership following the departure in May 1993 of Jonathan Agnew, the chief executive. Yesterday's bid demonstrates how far the company has turned around.