Private bank C Hoare & Co has been a family-owned business since 1672. Eleventh-generation CEO Alexander Hoare talks to Mike Scott about philanthropy, wealth management and surviving the credit crunch
As you approach the Fleet Street offices of C Hoare & Co, a top-hatted doorman politely asks you your business then takes you inside to a counter that looks like it could have come from a Charles Dickens novel.
And indeed it could have, although the bank considerably predates the great writer. It was founded by the Hoare family in 1672 and the family retains control to this day. When the doorman informs the counter staff that I am here "to see Alexander", he is not being informal – it is the easiest way to identify who you want to see with the board's seven managing partners all being members of the Hoare family.
Alexander Hoare is the managing partner and chief executive – the 11th generation of the family to run the bank and as such, he says, he has conflicting interests. "As the CEO of the bank and a member of the supervisory board, I am trying to run a successful bank, but as a partner I have to perpetuate a successful family business."
Hoares is a private bank, the sole survivor of the private deposit banks set up in the City in the 17th and 18th centuries. It currently has more than 250 staff and a balance sheet in excess of €1.3 billion. Two thirds of its business is straightforward banking, with the rest being devoted to wealth management.
It is one of the few companies that has ever been able to celebrate its first third of a millennium – something it did in 2005 in typically understated style by hosting a performance of Mary Poppins at a London theatre for customers and creating a specially-designed umbrella.
Philanthropy is a key part of the bank's philosophy, Hoare explains. "We do a form of tithing among the partners – there are seven of us but the profit gets divided up eight ways and the bank's charitable trust gets an eighth share."
This gives Hoares an insight into philanthropy that comes in very useful in advising clients wishing to put their money to good use, Hoare says. "We have 300 years experience of giving money away and we can point to schools and hospitals all around London and elsewhere that have benefited from our money."
The charitable activities are a great motivator for a family that counts the Stourhead Estate in Wiltshire and the Luscombe Estate in Devon among its properties. "The idea of making the trust richer and using the business to have some meaningful effect where it is needed – that keeps me working harder," he adds.
Each partner has their own causes they pursue through the trust, with one partner focusing on education for the underprivileged and another interested in green issues, while microfinance is a particular interest of the managing partner. "It started off with a disillusionment with the way a lot of aid was distributed, which struck me as unsustainable and unrealistic."
When he found out about the ideas of Mohammed Yunus, the father of microfinance – who won the Nobel Peace Prize for his efforts in establishing Grameen Bank, the first microfinance organisation –Hoare saw a symmetry between making money for the richest of the rich and channelling it back to the poorest of the poor.
As well as getting the family involved in charitable activities, "we also constantly try to get customers engaged – from 9am to 5pm, I work to make money for them and from 5pm to 9pm I try to get them to give it away. People often find it harder to give money away than they did to make it," Hoare says.
The historic and family nature of the business is a definite business asset, particularly in the present financial climate, he adds. "We are a private company of unlimited liability – it means we have far more to lose than our customers do if we get it wrong."
The bank's 300-plus years of experience "reassures customers that we know what we are doing – it does carry a certain weight. The volatility of the past year has been good for us. It has led to a flight to quality."
It also gives the bank a unique perspective on wealth management, where customers are often exercised with how to manage the transition of the business and assets from one generation to the next.
The structure of the bank makes it innately more cautious than some other institutions and it was unaffected by the sub-prime crisis. "We watched it all with curiosity but we never felt the need to change our model, which has been the same for a very long time." Nor did the bank feel any need to aggressively pursue growth. The bank is roughly the same size as when Hoare joined 20 years ago, he says.
It sees its competitors as institutions such as Coutts and Barclays Wealth Management as well as some of the Swiss banks, but "it is one of our guiding principles not to engage in head-to-head competition. The big banks can beat us on price and snazziness but we can beat them on execution."
Hoares only needs a tiny niche to prosper, he adds, and it only has about 10,000 customers. Indeed, the bank does not seem in any hurry to win new customers at all. It does not advertise – "word of mouth is very cost-effective" and Hoare says "we routinely turn clients down. To be exclusive, you have to exclude."
Hoare is at his most emphatic on the importance of the family in the business. "If you took the family out of this business, it would lose all that makes it relevant. The family aspect is central to what makes it attractive to customers and staff.
"My job is to hand the bank to the next generation in a better condition than when I started. To sell out now would be a huge betrayal of customers, staff and partners from the last 11 generations and the next eleven generations. On top of which, we would lose all the fun of the philanthropy and we would all be unemployable."
So, have you always been on this site, I ask as we head back down from a quick tour of the family museum to street level? "Oh no, we didn't move here until 1692," Hoare replies, looking quite shocked at the idea.