It really isn’t conventional, or good journalistic practice, to start an article by talking about how you admire your interview subject.
An exception has been made in this instance because when you speak to past and present Kleinwort Hambros employees about its new chief executive, Mouhammed Choukeir or ‘Mo’ as he is usually known, you are hard pressed to find anything but warm reviews.
Most characterise him as a top bloke (as we would say Down Under), hard-working, honest and principled, who is excellent with clients, but now charged with a difficult job in reinvigorating a private bank and investment house suffering strategic drift – nonetheless propped up by some loyal long-term clients and consistently strong investment performance.
Because Mr Choukeir was previously Kleinwort’s chief investment officer, as well as joint-deputy CEO along with Gabrielle Branson, he is adept at speaking to the press, having graced studios at the BBC and Bloomberg. Though he is more used to speaking about investment, rather than corporate, strategy.
Therefore, we can forgive him for occasionally slipping into corporatese when outlining his plans for Kleinwort Hambros: “In a nutshell, we are a young organisation with a deep and long heritage,” he tells me over video call.
This is a reference to the fact that Kleinwort Hambros in its present form was created in 2016 when French banking group Societe Generale bought Kleinwort Benson – a many-times-married UK merchant bank with roots dating to the late 1700s. SocGen then merged Kleinwort Benson with SGPB Hambros, an existing UK subsidiary it bought in the nineties.
Before joining Kleinwort Benson in 2011, Mr Choukeir was head of multi-asset class business at Morgan Stanley. He spent his early career in fixed income at Citigroup's investment bank in New York, London, and Madrid.
“I describe Kleinwort Hambros as the start-up with 200 years of experience,” he says.
“That means we have an exciting future ahead of us, where we are looking to nurture, to grow, to really create a big impact for our clients, our staff, and for society as a whole.
“If I could summarise it in one sentence, our vision is to be the leading responsible bank for client service and expertise.”
How to get there
One of Mr Choukeir’s headline aims is to grow Kleinwort Hambros from a business managing £15 billion (including loans) to one with more than £20 billion within five years and – naturally – to deliver a profit.
While it is difficult to get an exact picture of the finances due to a significant Channel Islands operation which pays a dividend to the mainland, the UK entity posted a £35 million pre-tax loss in 2019, mostly the result of a £37 million coronavirus-related goodwill impairment.
Operating income fell 6.2 percent from £84.9 million (2018) to £79.6 million in the full-year 2019. This income dip reflected lower interest rates and lower AUM, though operating expenses contracted 12.8 percent to £79 million, the result of tighter cost control, the bank said. The bank also maintained a robust capital position well above regulatory requirements, despite the weakness in the economy.
To return to profitable growth, Mr Choukeir is a disciple of the “happy staff lead to happy clients” school of thought. He wants Kleinwort to be recognised as one of the UK’s top employers, as measured by staff engagement surveys which examine a range of criteria including scope for employee development, a firm’s purpose, leadership, management, and its efforts in giving back to society.
On some of these metrics Kleinwort Hambros already excels: It has one of the smallest gender pay gaps in UK private wealth management, its executive committee has a roughly 50/50 gender split, and it features more non-white faces than that of your average private bank.
This is the result of numerous diversity initiatives implemented over several years, though Mr Choukeir says promoting a cohort with varying backgrounds remains front-of-mind. The bank also recently became a signatory to the UN’s principles for responsible investment (PRI).
Mr Choukeir has identified some areas of the bank which could be “leaner” – thus the circa 70 redundancies reported recently by thewealthnet, mostly in support and operations roles.
“[The pandemic] presented a new environment for us to revisit what is the right structure and size of our teams. We take these matters very seriously. We took our time and instilled robust processes to make those decisions and minimise the impact on our staff,” Mr Choukeir says.
“But I fundamentally believe that cost-cutting is not a winning strategy. My strategy is not about saying, let's reduce some costs here and there, and there you have it.”
Some of the former disquiet at Kleinwort Hambros seems to stem from the fact that Societe Generale allegedly tried to sell it last year, before U-turning when a suitable buyer failed to present, although these sale rumours were never officially confirmed. SocGen has said it now plans to invest in and grow the historic bank as part of its private banking network.
Mr Choukeir now says he wants to foster a culture where people feel free to challenge and have an open dialogue with management – a value he has tried to exhibit during the pandemic. Over his first 90 days he had more than 100 one-to-one virtual meetings with staff he might not otherwise get to speak to in-depth.
“I’m going to continue to do this going forward. Really my message to everyone is: We are going to share with you everything about this business’s strategy, tell you what's going on, what's working, and what's not.
“What I would expect in return is to have an open dialogue – ask your questions, verify the things that need clarification, engage with the future of this business. Even though we’re working remotely, we can use the technology to be closer than ever.”
Other remote working highlights have included the hosting of a substantial number of virtual events for clients, leading to a 72 percent year-on-year increase in client contact. Investment performance has also been strong, Mr Choukeir says: “One of the best in the industry as verified by the peer group we look at”.
The relationship with Societe Generale
It is worth noting that, in my experience, some behind-the-scenes hand-wringing about Kleinwort Hambros may have Xenophobic undertones – some in the private banking industry apparently don’t like to see a British institution in the hands of “the French”.
Mr Choukeir says one of the most important things he wanted to establish when he was in the running for the CEO role was Societe Generale’s commitment.
“I’ve been very encouraged by everybody at Societe Generale and our board saying ‘actually, we do have a strong business here that we need to build on’.
“We are making some large investments in the coming years, and clearly those investments will be a result of commitment from Societe Generale.”
Some of this will come in the form of hiring and Mr Choukeir says he has had a number of approaches from bankers at competitors – “I described this right at the beginning as the start-up with 200 years of experience – some people want to be part of that story and are excited by the transformation”.
Kleinwort Hambros and SocGen are even moving in together. When Kleinwort Hambros’ staff return to the office (presumably some time in 2021), it will not be to St James’s Square but Societe Generale’s glossy glass tower at Canary Wharf, though client meeting space will be retained in the West End.
It’s a move Mr Choukeir describes as a “win-win-win”, pointing to the Wharf office’s environmental award-winning credentials, modern-fit out, and the opportunity to work more closely with the parent’s corporate and investment banking lines.
“There are a number of clients that we potentially share – CEOs of businesses and family offices. Close collaboration to offer the best of [the bank] is definitely easier when you’re in the same building, strengthening the links between teams,” Mr Choukeir says.
Staff will also be allowed and encouraged to work flexibly, a policy in place pre-virus which has now been actualised.
“I think one of the things we've all learned through Covid is that having a lot of [office] real estate is unnecessary. It's not the future of work – we needed to reduce our footprint.”
Despite working more closely with Societe Generale, the Kleinwort Hambros brand will “absolutely be preserved”, Mr Choukeir says.
“When the merger took place four years ago, there was discussion and evaluation around this, and the decision remains today that Kleinwort Hambros is one of the leading brands in its target market. If anything, it will be promoted more actively than we’ve seen in recent years.”
While running an organisation with circa 700 employees is never going to be a straightforward task, Mr Choukeir does encourage his staff come to work with a relatively simple purpose in mind.
“We recognise that after health and loved ones, financial security and financial well-being is a top priority for clients. Our purpose and the reason we exist as an organisation can be summarised in one sentence and that is to simplify life's financial challenges," he says.
“That is our goal. I would like to thank all our staff for their continued commitment and flexibility to making this happen. It not only a worthwhile goal that contributes to the financial wellbeing of our clients, but also to a well-functioning economy and community.”
