Historical and Economic Profile of Baring Bank - Free Essay Example

Sir Francis Baring with his older brother, John had developed Baring Bank in 1763 and named it as John and Francis Baring Company in the City of London. John Baring was their father and he was a wool manufacturing trade. Their company situated at Cheapside and shift in to Mincing Lane within a few years. Barings was the worlds first merchant which provides finance and advice services for its clients. Francis was the one to leadership the firm and started to arrange some important transactions. Francis successes import many goods from other country to Britain, it including coffee, cocoa, tea and tobacco. Their idea for financing trade are flexible and innovative, this brings Baring enter the international level. Baring was just a small capital base bank as it only lives on its wits. By 1790, Francis had greatly expanded Barings resources and association with leading Amsterdam bankers Hope Co.. In 1793, Baring had moved to Devonshire Square., In 1800, John had retired then the company was named as Francis Baring and Co.. Francis had his new partners and they were Thomas (Franciss eldest son) and Charles Wall (Franciss son-in-law). In 1803, Barings had financed the purchase from France by the fledging United State of America of the southern State of Louisiana, among others. The cash-flow calculations were all based on cotton prices and the impact of the abolition of bondage. Government, large companies and wealthy clients chose Baring to be their first choice as a financial advisor and banker because of its great Jewish rival, Rothschilds. In the same year, Francis started to quit from active management and invited Alexander and Hendry to become his partner in 1804. The company was renamed again as Baring Brothers Co, and they remained this name until 1890. After Alexander joined the company, he brought millions of money to the firm by purchased a huge amount of land in Maine and Pennsylvania. During his journey, he also gets married with Anne Bingham, the Senator William Bingham of Pennsylvania Binghams daughter. This marriage brought an important connection between Barings and American banking industry. In 1806, the company was resituated at 8 Bishops gate and they remained the office at there forever. As the properties of Barings were expanding year by year, they finally build a new highly-rise building in 1981. In 1820s, Barings had to surrender its commanding in the City of London to the competitive firm, N M Rothschild Sons, because of its poor leadership. In 1830s, the new leadership was formed by Joshua Bates and Thomas Baring and they began a turnaround. Bates believed that Barings will have a greater opportunity lay in the West and they shift Barings attempts from Europe to the Americas. In 1832, a new Barings office was established in Liverpool and it main purposed is to capitalize on the new North American opportunities. In the year of 1843, Barings had become an exclusive agent to the U.S. government and they held this position until 1871. In 1847, the firm had rescued the Banque de France. At the same time, Barings was in his most influential transaction by involving the United States. Barings was in charged the Bank of the United States and private firms, and also the superior financial backers of the American railway business. In 1848, Barings organized and assisted the buy the Mexicans Texas by the U.S. government after the Mexican War officials. Within the American Civil War, Barings made the shop from Russia to purchase Alaska by the U.S. government. Barings had the foresight to see the great promising of this acquisition although William H. Seward, the Abraham Lincolns interior secretary, felt that this transaction was mock. In 1851, Baring and Bates had an American new partner, Russell Sturgis. Regardless of the abashment to his partners grounded by his mercies for the South in the American Civil War, Sturgis certified an apt banker. Bates dead in 1864 and the leadership role slowly assumed in the company. Within the 1850s and 1860s, merchandising faith business subjected the company with its constants income. Edward, who was the Thomas Barings nephew and Henry Barings son, had joined to become a mate in 1856. In the 1870s, the 1st Baron Revelstoke appeared under the leadership of Ned Baring. Then, Barings increasingly take part in international securities, and it more specialise in United States, Canada, and Argentina. Barings carefully and prosperously undertaking into the North American railway boom following the Civil War. A new railway town in British Columbia was renamed Revelstoke, in glory of the leadership of the bank that empower the finalization of the Canadian-Pacific Railway. In the 1880s, the firm got into weighty trouble in Argentine and Uruguayan debt due to the fearless efforts of overexposure them. In 1890, Barings escaped aground financially but the disaster started in 1824. In order to provide loans to the new community of Argentina, Barings had cooperated with Dutch banking firm, Adrian Hope and Company. This was the first transaction among the South American country and Barings. As times passed by, Barings had involved more towards Argentines economy which financing Argentine a huge variety of projects. This included the bathhouses, grand hotels, harbor construction, and even railroad lines. Barings financed in those not too small or too big projects. In fact, Barings had produced a very strong relationship with Argentine government and pointed managers from England to run the projects in Argentine National Bank. In 1886, Baring sustained Guinness on the London Stock Exchange that caused mountain police had to be summoned to stop crowds from intruding Barings with their application forms. By the turn of the century, Barings had become banker to the royal family, and in their time members of the Baring family have received five separate hereditary peerages as rewards for their services of banking. Lord Ashburton was the Chairman but he was just about to retire. He was a great friend of Margaret Thatcher and left Baring to become Chairman of BP, Britains largest company and one of the twenty largest companies in the world. The other Barings peers who have married across the length and breadth of Debretts include Lord Northbrook, whose ancestor, the first Earl of Northbrook, was Governor of India and First Lord of the Admiralty under Gladstone; Lord Revelstoke; Lore Cromer, whose grandfather was Consul Egypt and whose father was Governor of the Bank of England and British representative to Washi ngton during the Nixon years; and finally Lord Howick, whose father was the last colonial Governor of Kenya and who establish the great Baring Charitable Foundation, which ultimately controlled Barings and gave vast sums of money to charity. However in 1888, Argentina had accumulated a large amount of debt that causes the British financial community to concern about it through Baring bank transactions and activities. In 1890, the reveal of Barings obligation for the Argentines totalled 38 million pounds sterling loans. Barings revealed over 21 million pounds sterling in liabilities because Argentina was unable to pay back the loans. The Government ministers decided that English credit would be harmed along with the company if Barings failed to do so. As the consequence, the Bank of England issued a bond sale to Russia and organised a loan from the Banque de France. The financing protected the chronicle banking firm from destroy was the Baring Guarantee Fund. In the same year, the president of Argentine,Miguel Jurez Celman, was pressured to quit succeeding the Revolucin del Parque, and Argentine was close due to unable to settle its debt payments. This critical point finally displayed the vulnerability of Barings situatio n. William Lidderdale, the governor of the Bank of England had to be retrieved the fall short of reserves to sustain the Argentine bonds until they got their shelter by a consortium arrangement. In financial markets, the effect of commotion became known as the Panic of 1890. Barings could not reobtain its commanding situation although the rescue has been taken to avoid the worldwide financial crash. The Baring Brothers Co. Ltd. was formed as a limited liability company and the old partnership that will be a successful business had been transferred. In order to repay the rescue consortium, the Bank of England had gave then promises to liquidate the old houses and several partners were taken. Lord Revelstoke and others partners guaranteed to support the back by losing their partnerships and also their personal wealth. It took almost ten years to settle all the debts. Revelstoke was dying in 1982 and he did not have the chance to watch this success. The bank did not reobtain its important position in the international financial community since the time of the debacle in the 1890s, even though Barings was salvaged from the disgraceful fortune of liquidation. In 1906, the company did not involved in all transactions due to the restraint of North American and did not take part in any activities in the United States for almost eight decades. Bank of Britains industry in charge staff and the management kept their attentions on Barings and Barings had lost its trust to manage huge financial transactions as well domestically or internationally. The problems in Argentine had brought the effect of completely destroy the bank as the bank is the major universal financier. The firms management was working hard to look for London businesses and wealthy country gentlemen and conduct their small accounts. During the 1920s and 1930s, Barings kept on living under the stain of its past mistake. The banks management was only pursuing in the field of financial advice and consulting due to its lack of chance to make or arrange large financial transactions. When the worldwide depression of the 1930s, many banks was damaged but this did not affect Barings because the company was only involved limited degree of stock and bond. During the late 1930s, Barings successes to repair its reputation, and through the decade of the 1940s, Barings advanced in its financial consulting services. The Barings most wonderful achievement in 1980s was the activity place up by Christopher Heath to exchange stocks and shares in Japan. When the Japanese Stock Market started to boom, Barings had carved out a sensational position there. During the 1980, Heath was famous to become the highest paid banker in Britain, with the salary of 3 million. He started his career in Japan and moving its business in Hong Kong, Sin gapore, Indonesia and all the other Asian countries. In 1989, Baring issued their staff with security passes and there were some green flickering Reuters screens giving instant share prices on every stock market across the world but Barings principles seemed to have stayed pretty much the same. Within the early and mid-1990s, Barings had fasten the speed of its international brokerage performances. With rapid employment and promoted new employees, the Tokyo, Singapore, London, and the rest of the worlds offices had expanded dramatically. Nick Leeson was one of the new employees. Until 1900, Barings still did not reimburse to issuing on a stable scale and still focusing on securities in the Argentina and United States. Under the leadership of John, Edwards son, it seems to form a new and regulated manner to made Barings became a more suitable spokesperson of the British organization. The company began a close relationship with the British emperor with the build of ties with King George V, with that would stand until Barings conclusive break down in 1995. The posterity of the Baring family tree have five of the branches and they were distinguished to the peerage, with the titles Baron Revelstoke, Earl of Northbrook, Baron Ashburton, Baron Howick of Glendale and Earl of Cromer. The company would charged its pre-eminence in the world of finance because it restraint during this period but it would received dividends when its turndown to take an opportunity on financing Germanys recapturing from World War I. This had saved the other British banks from the hurtful debt experienced at the beginning of the Great Depression. While the Second World War, the British government helped to finance the war effort by liquidating the assets in the United States. Following of the war, Barings was befall in size and influence by other banking houses, but continue to be an important player in the market, until 1995. The Baring Timeline 1760s 1762 The firm was established on Christmas Day as John Francis Baring Co, merchants. 1763 The firm opened for business on New Years Day. 1770s 1774 Account opened for the first North American client. 1775 Account opened for the first Russian client. 1780s 1783 Won contract won to supply stores to the British army in North America. 1790s 1795 First resident agent, Alexander Baring, sent to the USA. 1796 British government bonds issued. One million acres of land in the Territory of Maine acquired as an investment on joint account. 1800s 1801 Managed the firms first bond issue for an overseas client, the Kingdom of Portugal. 1803 With Hope Co of Amsterdam, issued US$11.25 million bonds to finance the USAs purchase of the Territory of Louisiana from France. Appointed London agents of the United States government. 1810s 1817 Lead managed bond issues for the government of France to finance reparation payments to the allies. Appointed London agents of the Bank of the United States. 1820s 1824 Managed the first bond issue for Argentina [Province of Buenos Aires]. 1830s 1835 Appointed London agents for the government of Upper Canada. Appointed Russian governments agents in London. 1850s 1852 Managed the firms first major issue of railroad bonds to finance the Canadian Grand Trunk Railway. 1860s 1860 Re-established ship management activities, especially the management of clipper ships bringing China tea to Britain. 1880s 1881 Managed the firms first bond issue for an Indian business, the Bengal Central Railway Co Ltd. 1882 Managed the Italian Government Currency Stabilisation Loan. 1886 Floated the private partnership of Arthur Guinness, Son Co as a public company. 1890s 1890 Reconstruction of Barings as a limited company, Baring Brothers Co., Limited, following a liquiditiy crisis and rescue by a Bank of England loan. 1900s 1902 Commenced business for the Japanese government through lead managing the first yen denominated bond issue in London. 1909 Participated in the formation of the National Bank of Turkey. Lead managed a bond issue for the City of Constantinople to finance the construction of the Karakeuy Bridge. 1910s 1914 Advised the Russian government on raising wartime finance and handled the banking arrangements required for the governments sterling purchases of war supplies. 1920s 1920 Advised major engineering company Sir WG Armstrong Whitworth Co Ltd on its reconstruction and refinancing. 1922 Introduced the State of Czechoslovakia bonds to the international markets in order to finance monetary and infrastructure reconstru 1929 Advised on the reorganisation of the Lancashire cotton textile industry through the formation of the Lancashire Cotton Corporation. 1930s 1930 Managed the issue of bonds for Underground Electric Railways Co of London Ltd in order to finance the extension of the London Underground and the reconstruction of several central London stations. Advised on the reconstruction of Argentinas external public debt. 1950s 1951 Arranged the firms first bond issue for the World Bank. 1955 Established an Investment Department to undertake asset management. 1960s 1962 Advised Courtaulds Ltd on its defence of a hostile takeover bid from ICI Ltd. 1966 Became a founder shareholder in the Australian merchant bank of Martin Corp Group. Disposed of 1983. 1969 Establishment of the Baring Foundation to receive 74 per cent of the equity of Baring Brothers Co Limited. 1970s 1970 Participated, with four other banks, in the formation of the consortium bank of London Multinational Bank Ltd. Sold interest in 1977. 1972 Formed the Paris-based merchant bank of Baring Brothers SA. 1973 With London Multinational Bank Ltd and Sanwa Bank formed Baring Sanwa Multinational Bank Ltd at Hong Kong and Singapore. Participated, with three other banks, in the formation of ICON Ltd, merchant bankers at Lagos, Nigeria. 1974 Opened a representative office at Tokyo. Participated with other banks in the formation of Pertanian Malaysia Sanwa Multinational Berhad, merchant bankers in Kuala Lumpur, Malaysia. 1978 Bought out remaining shareholders in Hong Kong and Singapore joint venture Pertanian Malaysia Sanwa Multinational Berhad. Renamed Baring Brothers Asia Ltd. Established a representative office in New York which was reorganised in 1979 as Baring Brothers Inc. 1980s 1983 Formed Baring Brothers Halkerston Partners Ltd, merchant bankers at Sydney, Australia. 1984 Acquired Japanese broking business of Henderson Crosthwaite which was then incorporated as Baring Far East Securities Ltd. Renamed Baring Securities Ltd in 1986. Baring Brothers Hambrecht Quist Ltd formed to manage venture capital funds. 1985 A holding company structure adopted. Barings Plc, now fully owned by the Baring Foundation, was the top level in the structure. Wilson Watford, London stockjobbers engaged in the gilt edged market, acquired and renamed Baring, Wilson Watford. Baring Securities admitted to membership of the Tokyo Stock Exchange. 1986 Baring Brothers and Baring Securities opened a representative/research office at Seoul, Korea. Baring Capital Investors Ltd formed to advise funds providing development capital, in particular for management buy-outs. Baring Securities Inc established in New York. 1987 Baring Securities [Singapore] Pte Ltd established. 1988 Reorganisation of Barings business in Paris through formation of Baring Brothers [France] SA to provide corporate finance advisory services. Formation of Baring Brothers [Espana] Ltd to provide corporate finance advisory services. Baring Research Ltd established at Bangkok. Baring Securities Inc opened an office at Los Angeles. 1989 Formation of Baring Brothers [Deutschland] GmbH at Frankfurt to provide corporate finance advisory services. Formation of Baring Brothers [Italia] Srl to provide corporate finance advisory services. Establishment of representative office at Osaka by Baring Securities. The office was upgraded to branch status in 1990. Baring Securities opened branches at Kuala Lumpur and Jakarta. The top holding company for Barings investment management services was renamed Baring Asset Management Ltd and the London based companies centralised at new premises in the Broadgate Centre. 1990s 1990 Acquired a 40 per cent interest in Dillon Read, New York investment bankers. Baring Research SA de CV opened at Mexico City. Baring Securities [Philippines] Inc established at Manila. Baring Securities [Taiwan] Ltd established at Taipei. 1991 Baring Securities Argentina SA established at Buenos Aires. 1992 Baring Brothers opened a corporate finance office at Mexico City. Baring Securities do Brazil Ltda established at Sao Paulo. Baring Securities [Andean Pact] Ltda formed at Bogota, Colombia. 1993 Baring Securities Australian business merged with that of Mackintosh Securities Ltd. Abbey National Baring Derivatives Ltd, a joint venture with Abbey National Plc, formed to do business in the interest swap options and currency swap markets. Barings [Chile] Ltda established. Baring Securities Inc Surcursal Del Peru established. 1994 Established a corporate finance representative office at Buenos Aires. 1995 Barings Plc became insolvent and its business was acquired by ING and later renamed ING Barings. Baring Brothers Ltd, Baring Brothers International Ltd and ING Baring Securities Ltd were initially the three major operating companies. ING Barings in London moved to 60 London Wall. (Sources from : https://www.baringarchive.org.uk/features_exhibitions/timeline/) Singapore Since 1987, Barings had sustained Barings Securities Singapore Ltd (BSS) which was an office in Singapore. A Singaporean registered company called Baring Future Singapore was a devious subsidiary of BSL. BFS was initially developed to let Barings to barter on the Singapore International Monetary Exchange. Baring Securities (Singapore) Pte Limited (BSS) was the other significant Singaporean subsidiary of BSL. Securities trading were the BSSs main action.