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Spot the connection: BBH, Brown Shipley, Deutsche Bank and...Ballymena, Northern Ireland
11/04/2018 , Ian Orton

At first sight any connection between Ballymena, County Antrim and banking and financial services would appear to be remote, if not non-existent.

But, courtesy of Alexander Brown, Ballymena, a former centre of Northern Ireland’s linen industry, can claim to be the spiritual birthplace of three significant banking and financial firms: Alex Brown & Co., Brown Brothers Harriman (BBH) and Brown Shipley.

For Ballymena was the hometown of Alexander Brown, a successful linen merchant who decided to relocate to Baltimore, Maryland in 1800.

After re-establishing his linen business Brown moved into banking. His firm Alexander Brown & Son, effectively become the United States' pioneering investment bank following the successful underwriting of the issue of stock for the Baltimore Water Company in 1808.

Taking a leaf out of Mayer Amschel Rothschild's book Brown also used his sons to expand his geographical reach.

In 1810 he sent William, his eldest son, to establish an office in Liverpool. Joined by Joseph Shipley, another American, in 1826 this soon started trading as Brown Shipley & Co with a focus on banking rather than the import and export of “dry goods”. 

John, another son, went to Philadelphia in 1818 for the same purpose. An offshoot of this office opened in New York in 1825 under the name of Brown Brothers & Co with James, the youngest of the Browns, overseeing operations.

All three firms prospered during the nineteenth and twentieth centuries.

This was especially the case with Brown Shipley in the UK. This soon became part of the UK merchant banking establishment with two of its partners subsequently becoming Governors of the Bank of England.

Indeed in Sir Montagu Norman, Brown Shipley can claim to have supplied not just the most long serving Governor of the Bank of England but also the most controversial as a result of his evangelical support for the UK’s return to the Gold Standard in 1925 and his friendship with Hjalmar Schacht, the president of Germany’s Reichbank and a member of Adolf Hitler’s government.

Until 1919 Brown Shipley operated in partnership with New York-based Brown Brothers. Thereafter Brown Shipley operated independently as a partnership until 1946 when it became a limited company.

With its merchant banking activities increasingly constrained as a consequence of post-war foreign exchange controls Brown Shipley became much less important as a banking institution and was eventually acquired by KBL in 1992.

Thereafter it received a new lease of life as a private bank and wealth manager as the UK arm of Luxembourg-based KBL European Private Bankers.   

Brown Brothers, which continued to operate as a partnership, also prospered during the nineteenth and twentieth centuries.

A significant event occurred in 1931 when it merged with Harriman Brothers & Co., another New York private bank and W.A. Harriman & Co., a brokerage to form Brown Brothers Harriman.

Prescott Bush, the father of George Bush, the 41st President of the United States, and grandfather of George W Bush, the 43rd President, was a partner in the expanded partnership.

After the passing of the Glass-Steagal Act in 1934 BBH decided to focus on commercial banking as a private bank. Thereafter it became increasingly focused on the provision of custody and investor services, especially during the 1960s, as well as providing banking and wealth management services for wealthy customers. It still operates as a partnership.

By the late twentieth century Alex Brown & Co. had become one of the United States biggest brokers and investment banks.

In 1997, however, it lost its independence when it was acquired by New York-based Bankers Trust to form BT Alex Brown, an entity subsequently acquired by Deutsche Bank in 1998 to boost its global investment banking ambitions, especially in the US.

These have become increasingly problematic (as recent events have shown) and in 2016 Deutsche decided to offload its US private client interests to Raymond James, another big US brokerage firm with wealth management interests.

The Alex Brown & Co heritage still exists, however, in the form of Baltimore-based Brown Advisory. Established as an investment advisory arm by Alex Brown in 1993 the firm retained its independence at the time of Bankers Trust merger through a management buyout.

The firm has grown and prospered subsequently as an investment management specialist and opened a London-based operation staffed by a number of UK wealth management veterans in 2008.    
 

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