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Is this Germany's equivalent of C. Hoare & Co?
10/08/2018 , Ian Orton

Established in 1674 and still owned by the founding family Frankfurt-based Bankhaus Metzler has obvious similarities with C. Hoare & Co.

Founded in 1672 C. Hoare & Co. is still owned by the descendants of Richard Hoare, its founder, some of whom still play an active role in the management and day-to-day operations of the bank eleven generations later.

On closer examination, however, there are significant differences between the two institutions despite the fact that both function as private banks.

C. Hoare & Co. still focuses on traditional banking services, i.e. the provision of deposit taking, credit and payment and money transmission services from its London headquarters at 37 Fleet Street and its solitary branch in Lowndes Street.

These play a very minor role at Metzler, however, which has largely eschewed these in favour of asset management, capital markets and corporate finance-related activities, which also flavour its private banking offering. The latter focuses on discretionary asset management and the provision of trustee services.

Realising that it wouldn’t be able to compete with the new big joint-stock banks that emerged during the nineteenth century Metzler made a conscious decision to shun balance-sheet related activities to focus instead on fee and commission-related activities where the demands made on capital are much smaller and it could establish a better competitive edge over its rivals.

Fee and commission income of EUR 192.9 million accounted for 96.0 percent of total income of EUR 200.9 million for the year to 31 December 2017.

At C. Hoare & Co it is almost the exact reverse with interest income accounting for almost 80 percent of the £105 milion of income it generated during its most recent financial year.

Metzler has also expanded its domestic and international presence.

In Germany it has offices in Cologne/Dusseldorf, Hamburg and Munich as well as its Frankfurt headquarters. It also has offices or subsidiaries in Atlanta, Los Angeles, Seattle, Tokyo, Beijing and Dublin. 

The Frankfurt bank has undergone a relatively recent corporate restructuring. In 1986 it converted from a partnership structure to become a limited company, albeit with ownership restricted to the Metzler family, a number of whom still play an active part in its management.

Asset management appears to account for the bulk of Metzler’s income. It had around EUR 76 billion of assets under management at the end of December and was active in both institutional, i.e. pension fund management, as well the retail market.

Its asset management-related activities encapsulate mutual funds, real estate investing and pensions and it offers a variety of equity, real income, multi-asset and absolute return strategies.

Metzler is also an advocate of environmental, social and governance (ESG) investing. In addition to incorporating ESG criteria into fundamental equity analysis it claims to be the first German asset manager to offer sustainability reporting for retail funds, segregated funds and pension funds.

Going forward the bank intends to expand its pension-fund related activities taking advantage of new German legislation which came into force in January 2018 to establish a non-insurance-based direct contribution (DC) pension fund.

Metzler also has a mutual funds platform, the Metzler Fund Exchange, encapsulating assets of around EUR 18 billion.

Metzler’s capital market-related activities encapsulate equities and fixed income trading as well as foreign currency while its corporate finance division offers a full range of M&A, advisory and fiduciary and investment structuring services.

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