Hambros makes changes at top

JOHN EISENHAMMER

Financial Editor

Hambros yesterday announced a management shake-up, staff cuts, and a re-focusing on its classic merchant banking activities in a drive to restore profitability and repair its deteriorating image in the market.

Sir Chips Keswick, formerly chairman and chief executive of the bank, moves up to the newly created position of group chief executive, while Michael Sorkin, the driving force behind the changes, becomes deputy chairman of the bank and head of the management committee implementing the new strategy.

Reporting a pounds 7.7m pre-tax loss, after a heavy pounds 23.5m bad debt provision and pounds 8.8m restructuring costs, Hambros said yesterday it will be cutting back its ordinary corporate lending operations to concentrate on specialist business, while strengthening its corporate finance and investment management activities.

Coming on top of the closure of Hambros Clearing and the sale of its Australian stockbroking business, the planned reductions in corporate lending and treasury and derivatives operations will result in a 10 per cent reduction in banking staff, currently totalling1,200.

The group structure is to be clarified, bringing the development capital business into the bank, while emphasising the distinctness from the separately listed insurance and estate agency businesses.

Hambros said it intends to build up its corporate finance department under Nigel Pantling, including further hirings. The bank is also assessing its options with a view to increasing its pounds 8bn of funds under management by "several billions" of equity funds, either by acquisition or joint- venture, but said it is not yet talking to any potential target.

"We are saying to the world at large, we have two businesses and you seem not to understand which is the more important, the merchant bank or the estate agencies. We are making absolutely clear that merchant banking is the heart of the business, and there are two other businesses tacked alongside it," said Sir Chips.

IBCA, the bank credit rating agency, yesterday downgraded Hambros' individual ratings from from B/C to C, citing the deterioration in performance.

The new strategy was accompanied by a mild reshuffle, although no new faces were brought in. Sir Chips and Michael Sorkin are now in the driving seat, assisted by Charles Perrin, who becomes chief executive of the bank. The main victim is Christopher Sporborg, who relinquishes his job as chief executive of Hambro group investments to become chairman of the estate agency and insurance businesses.

The share price closed up 9p at 202p.