One consequence of getting older is that friends and former colleagues appear more frequently in the news. Last week it was the planning minister, Greg Clark, who I met when we were PhD students at LSE, launching a revamp of Britain’s complex planning rules. Yesterday it was Ian Hannam, who resigned as chairman of JPMorgan Cazenove.
Ian resigned because the Financial Services Authority (FSA) fined him £450,000 for sending inside information to clients. There is no suggestion of a lack of integrity, nor did he profit in any way. And he disputes the finding and will contest it at a tribunal. But it’s a sad event. Ian is one of the most important investment bankers in London of the last ten years, having advised on a great swathe of M&A and equity offerings in the global mining sector. When so much of what goes on in finance is obscure, of marginal social value and would probably not be missed if it disappeared, he has been at the heart of what capital markets are supposed to do: linking pools of capital to new investment opportunities.
I first met Ian in my first investment bank job, Robert Fleming. An entrepreneurial, somewhat old fashioned middle sized investment bank, Flemings landed the global offering by the Wellcome Trust of their stake in Wellcome plc (later to be merged into what is now GlaxoSmithKline). It was a huge, complex deal that nobody expected Flemings to get, let alone to manage on their own. But with Ian and his war room, the bank successfully acted as global coordinator, in one of the first major book-building deals done in London.
In 1993 I resigned from Robert Fleming to take a job at JPMorgan. I was surprised and vaguely flattered that the heads of equities, sales and research all tried hard to persuade me to stay. It is conventional in banking to try to stop people leaving by high pressure persuasion. Goldman Sachs was always reputed to lock defectors in a room for a day until they agreed to stay. After I’d failed to be convinced by the three heads, they brought in Ian. He was particularly annoyed at my departure because one of the people at JPMorgan who had persuaded me to go there was an old colleague who had worked with him previously at Salomon Brothers. This sort of interconnection is also common. Ian did what was expected of him on these occasions, building a wonderful picture of my future if I stayed at Flemings while rubbishing JPMorgan. While quite impressive this obviously didn’t make any difference to me and I duly left.
Ironically, Flemings was later bought by Chase, which then merged with JPMorgan, so in 2001 we ended up as colleagues again. By this time Ian had become a formidable force in mining corporate finance. JPMorgan gave him a much better platform for his skills, as he could offer a far broader and bigger range of financial products to his clients. He did outstandingly well because he was smart, direct, offered unstinting loyalty to his clients, worked very hard and in particular really checked out the assets of the companies he worked on. There are plenty of stories of him going down mines and quite literally kicking the tyres.
He once explained his (and our) value to clients. They were intelligent, highly effective people running giant, complex international businesses. But the stock market was a complete mystery to them. We understood it and could give genuinely helpful advice: do this and your stock price will go up; do this and it will go down. To the clients this was, as he put it, “alchemy”, but it worked and they needed that advice, honestly given.
I very much hope he wins the appeal but even if he doesn’t, there is a lot to learn to from his success.