Winning the icy chukkas – the bank that hosts a snow-polo tournament
THE game of polo is one of the oldest sports in the world. Originating in ancient Persia, it is thought to have begun as a way of training elite cavalry troops. It was brought back to Europe in the 19th century through the Calcutta Polo Club, established by two British officers in India who formalised the rules. But they would hardly have imagined this latest and most exciting variation – polo played on snow, against the backdrop of the gorgeous Swiss Alps.
Held in Klosters each year, the small, traditional alpine resort favoured by the Royal Family, the Berenberg annual snow-polo match is the must-go warm-up event for the Davos economic conference. Unlike other snow-polo matches, the Klosters tournament is held mostly (though not entirely) at night, so that the distinguished guests can ski during the day.
The event is the perfect cocktail of money and power, attended by a fabulous mix of German industrialists, British and Argentinean polo players and the occasional shabby journalist. The polo field is a vast, snowy expanse, with the goals at each end marked by huge inflatable champagne bottles. Surrounding the arena is a six-foot tall ice wall, on which spectators can perch and watch the action from above. The atmosphere is electric, as horses rush past and the bright orange ball flies about and into the crowd.
This year, the event is rather special, at least for the Brits scattered around the lavish VIP tent. Berenberg, Germany’s oldest private bank and the sponsor of the tournament, is launching its private banking operation in the UK. Leading the Berenberg polo team out through the icy chukkas is Fred Hervey, one of Berenberg’s two new British private bankers. He and Ross Elder both recently left Barclays Wealth’s private banking section for Berenberg, and they seem almost childishly excited by their new roles – although perhaps that is just the polo match atmosphere.
A TRADITIONAL, FAMILY OWNED BANK
“The very first element – what really drew me in – was the 420 years of history. The bank is over a hundred years older than Coutts and nearly that over Hoare and Co,” says Elder. “And it still has the structure of a family owned business, even after all this time.”
The bank is structured as an unlimited liability partnership, and so the partners are entirely liable for the banks’ losses – even (for five years) after they leave the company. And unlike larger banks, Berenberg was never in risk of needing a bailout. It maintains a core capital ratio of 13.5 per cent – the Basel III regulations are only raising the requirement to 7 per cent.
As Andreas Brodtmann, one of Berenberg’s three managing partners, argues, unlimited liability “keeps you careful, and not too risk minded, because you always have to bear in mind what could go wrong.” “We have a very consistent organisation structure, our managing partners are not like CEOs or chief financial officers – they are there for a long time, and so they are consistent in their policy.”
But Brodtmann is adamant that while Berenberg is prudent, it is not conservative. “Unlike other traditional banks, we have grown our business quite substantially. When I joined, we had around 300 people in the bank. Now it is closer to 1,000. We have offices in 17 cities abroad and in Germany. So we are growing – but while we grow, we are always in control of risk. It is organic, and we will not let new ventures endanger the the bank.”
Underpinning it all is a solid, pragmatic approach to business. For all its tradition, the bank has invested extensively in a very up-to-date information technology system. 120 of its employees are in the IT department.
“All the technology is proprietary,” says Elder. “There are no outside solutions bolted on.” That means that the bank can offer extensive performance reports to clients, in a way other similar banks struggle.
The technology also allows the bank to automatically reimburse its clients any third party payments the bank receives – such as trail fees from funds. “Berenberg is way ahead,” says Elder. “We want to provide genuinely unconflicted advice to our clients.” While Berenberg has a large investment bank business in London already, Elder and Hervey stress that they are not providing repackaged investment bank products.
Instead, the objective is client retention. The bank takes a minimum portfolio size of around £1m. “We want to be able to provide every client with the same kind of tailored, personal service, regardless of portfolio size – we couldn’t manage £150,000 or £200,000 accounts, so we don’t take them”.
But expanding into Britain will not be easy. Hervey and Elder will be hoping the competition with more established British banks doesn’t go the same way as the polo: Despite Hervey’s best efforts, Aston Martin’s team beat Berenberg 12-10 in the final.
FACT BOX | BERENBERG BANK
Joh. Berenberg, Gossler & Co.
History:
Founded in 1590 in Hamburg, by brothers Hans and Paul Berenberg, Berenberg is Germany’s oldest private bank. The Berenberg brothers were not in fact German however, but Dutch.
In 1585 the brothers were forced to flee the commercial hub of Antwerp for being Protestant. Many of the refugees in Hamburg were among its most entrepreneurial inhabitants, and the Berenberg brothers thrived, setting up the trading house which later turned into the bank.
Assets under management:
Berenberg has more than €25bn of assets under management, and a balance sheet of €3.4bn.
Awards:
Winner of the Euromoney private banking survey of 2010.
Ranked first in research, sales and corporate access among German mid caps by Thomson Reuters.