Schroder family sought advice

DAVID HELLIER

Amid renewed speculation about the future of Britain's remaining independent merchant banks, it emerged yesterday that trustees of the Schroder family, which holds about 48 per cent of the merchant bank's shares, have already sought advice on whether the family should hold so much of its pounds 800m wealth in a single investment.

Both Lord Templeman, a former High Court judge, and George Mallinckrodt, the bank's chairman, confirmed that they were involved some years ago in discussions with trustees of the family to advise them on the issues involved.

In recent weeks there have been rumours of significant interest in Schroders, which is, in effect, controlled by two family members.

One of the most attractive of the remaining independent UK merchant banks, it is seen as a possible bid target.

Lord Templeman said he was an old friend of the Schroder family and was convinced that "they would go along with anything that was in the interest of all shareholders of the bank, not just their own".

Mr Mallinkrodt said yesterday that Lord Templeman was satisfied that the dividend income on the family's investment in Schroders "provided, by any standards, sufficient income to fund a diversification of the family's investments".

"I attended the meeting myself and made him aware of all the risks," Mr Mallinkrodt said. "And I did not mince my words." Mr Mallinkrodt, who has married into the Schroder family, said the family and its trustees were committed to supporting the management of Schroders to the benefit of all shareholders. He said in 41 years at the bank he "had never seen so many opportunities".

The large family shareholding in the bank could be a serious obstacle to any bid, but since the Barings debacle, concerns about having so much of family assets tied up in one investment may be shifting the balance in favour of a purchaser.

Yesterday, shares in Schroders gained 24p to 1,138p as the merchant bank sector reacted excitedly to news of Dresdner Bank's interest in Kleinwort Benson.

Both Robert Fleming and NM Rothschild appear less vulnerable because their shares are mainly family-held and privately traded.

Trading in the shares of Robert Fleming is scrutinised by the bank's chief executive. The family owns about 35 per cent, with a further 10 per cent held by directors and employees.

The Rothschild family and its affiliates, in effect, own 75 per cent of the shares in that merchant bank. Sun Alliance holds 20 per cent while Eagle Star has the remaining 5 per cent. Who owns merchant banks Shareholding structures of four of the surviving mainly UK-owned merchant banks: Schroders, Robert Fleming, Hambros and NM Rothschild Schroders: Schroder family 48.1% Postel 3.9% British Rail Pension Fund 3.26% Status of the shares Publicly traded Robert Fleming Family holdings 35% Directors and staff 10% Institutional shareholders 55% Status of the shares Privately held All transactions monitored by the chief executive Hambros Gruppo Bancario S Paolo 14.14% Guardian 9.9% Norwich Union 4.8% No other shareholder has more than 3% including individual family holdings Status of the shares Publicly traded NM Rothschild Family and affiliates 75% Sun Alliance 20% Eagle Star 5% Status of the shares Privately held