Bella Hoare is one of six partners who head up the UK’s oldest private bank C. Hoare & Co. The bank was founded by Richard Hoare in 1672 at the sign of the Golden Bottle on London’s Cheapside and today employs around 400 people in its Fleet Street headquarters. Bella talks about how private banking is adapting to the new world of finance.
How do you balance the needs of existing clients with a more traditional approach and attracting the next generation?
It’s not proved as difficult as you might think. We are always open to new clients. Before we had online banking, existing customers weren’t asking for it. They didn’t know they wanted it. However, we’ve had significant take up and now have 60% penetration in online banking, less for our app but that is building.
The essence of private banking is relationships. No technology can replicate that. It is human to human; for us, humans are the decision-maker. For many of our customers, the ability to speak to someone who knows you and your life is vitally important. They’ll use the app to pay the gardener, but anything complicated – such as financing for a new property – and they’ll talk to us.
What does that relationship look like in practice?
When someone first joins the bank, they are introduced to their relationship manager, who handles their day to day needs. These relationships are enduring – some people have had their relationship manager for over 20 years, and have even invited them to their weddings.
That isn’t for everyone. Some customers just want their manager to do exactly as they ask them to do. We can accommodate that model as well. The skill of the manager is in judging the type of relationship the customer wants.
The ultimate decision maker is always a human being. With any lending decision, we will meet the principals and consider the proposition. We may say no, but we can tell the borrower exactly why we have said no. We can look at their whole situation – the assets they can put up as collateral for example.
This is a labour intensive model – does being privately-owned help?
Definitely. We have a small number of shareholders, just six of us. It gives us a razor- sharp focus on that private banking market. The sale of the wealth management business made that a lot easier. It meant that we could build relationships with other wealth managers and give our clients options: some want everything as cheap as chips and others want discussion and investment advice. We can offer that now.
What was your background?
I started at Cazenove, but my first husband was Russian and so I ended up working in Moscow. This was great experience, because I got a much higher level of responsibility far earlier. Everyone was learning, so if you did something right, tomorrow it would be your job. Before long I was doing team management, cash flow management, technology management. It was a career leapfrog. I came back to join the bank in 1999 (which wasn’t a great year in Russia). I was made a partner in 2001.
How does the family ownership influence the way the bank is run?
We’ve been lucky in that finance is the core of what we do and it is still a valid service. If we’d been in the printing business it might have been a different story. This is a family business, but it’s not a normal family business. There is no automatic right of inheritance and you don’t know you’re going to join the bank. It is a partnership model and those who don’t join the partnership don’t have a financial interest in the business. This is the 11th generation, so some of us are fairly distant relations. One of my fellow partners is my 9th cousin, so we haven’t grown up fighting over the Lego.
We have chosen to work together. It’s a business that happens to belong to a family, but the interests of the business are more important. There are around 2,500 living cousins and only six lead the business.
What is your client base today?
It is fairly broad. We have entrepreneurs that like the way we do things. We also have landed estates, (who may also be entrepreneurs). These tend to be good borrowers – they are asset rich and cash poor. We have lots of clients in the legal sector – barristers and QCs. We have lots of nice people with complex lives that are wealthy enough to want the help of a private bank.
When I look at the challenges they share, it is time. We give them time. They are very busy and/or very uninterested in finance. One type of client just wants to make sure that when they give the bank an instruction, it is done quickly and efficiently. The other type of client is someone who really wants us to take the time to talk to them and build the relationships.
Lots of modern banking works on the basis that it is very efficient because you do it all yourself. This just doesn’t work for people with multiple assets and income streams. It is difficult to lend to someone who may be selling down their wine cellar, or have irregular cash flow from their properties, or dividends from their business. We can look at the whole picture of their wealth.
What else is important in cementing C. Hoare’s place in the future of finance?
People know their deposits are safe. We saw our deposits rise 40% in 2008. Our rates are not the highest, but they know they can trust us.
What do you see as the threats to your business?
There are always cost pressures, certainly to stay up to date with regulation. The regulators make it harder to maintain a relationship-based approach. Our terms and conditions have gone from two pages to seven pages and, to my mind, are less clear than they were. I’m not sure the customer is better off. We are quite small, so regulation is expensive for us.
We worry about staying relevant, but while we worry about it, I believe we’ll be OK. Our worst enemy would be complacency. The generation that is coming through in their 20s – will they change? Will they be a different 40-year old?We may need to be a different bank for them. The pace of change is speeding up and we are investing in that change.
We are aware that our technology has to be good enough to compete, but with the overlay of an actual relationship with a human being. We don’t have strict limits on the amount of money people need to have. We will always take a view and are happy to build relationships over time. We’ve got time for people.
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.