That's too bad. A Guinness flotation might have recreated Barings'* glory days.
From The Edge, Malaysia, January 26:
Diageo Plc doesn’t plan to sell the Guinness beer brand or its stake in Moet Hennessy, according to a statement Sunday.
The company was responding to reports that it was considering a sale of Guinness or its 34% stake in Moet Hennessy, LVMH’s drinks division. “We can confirm that we have no intention to sell either,” it said....
....MORE
*From September 2007, A RUN ON THE BANK, the first time the bank got in trouble (pre-Leeson):
Nov. 16, 1890 THE BARINGS IN TROUBLE; WALL STREET LOSES ITS HEAD WHEN THE WORST IS OVER. STOCKS TUMBLE WILDLY IN THE BREAK RESULTING FROM THE DIFFICULTIES OF THE GREAT ENGLISH HOUSE.
Before the market opened yesterday, the Street was flooded with abounding rumors intended to create distrust and accomplishing all that was intended. For a long time the Stock Exchange district has been flooded with tales of dire distress in high financial quarters. Not one house, but many, rumor has declared to be in difficulties threatening disaster....
*****
But before that:
...Only one Baring received a peerage principally because he was a banker: Edmund, otherwise known as Ned. The others had been politicians or public servants. Ned became Lord Revelstoke in 1885, when London was the undisputed financial capital of the world. Revelstoke father and son ran Barings for fifty years, and Ziegler describes them as a formidable pair.
`Both were intelligent and cultivated, self-confident to the point of arrogance. They were dignified in manner and imposing in appearance, men accustomed to demanding the deference of their inferiors, putting into that category the generality of mankind.' But Ned Baring also had a streak of recklessness inherited from his grandfather, and a gambler's instinct (his father won his Mayfair house at a game of cards). He was a generous man, and he could afford to be: his annual income was 100,000[pounds sterling], worth 6,100,000[pounds sterling] today.
Revelstoke's enthusiastic embrace of Victorian capitalism red in tooth and claw was best illustrated by the flotation of Guinness shares in 1886. So over-subscribed was the issue of 4.5 million [pounds sterling] of ordinary and preference shares that the price of 10[pounds sterling] ordinary shares rose to 16[pounds sterling] 10s when the market opened.
No fewer than one-third of these shares had been allocated by Baring Brothers to members of the family and their intimates; 800,000[pounds sterling]-worth was reserved for the bank itself; and another 800,000[pounds sterling]-worth was allocated to partners, their friends and close contacts in the City. The profit attributed to the house and the partners alone was in excess of 500,000[pounds sterling]. `Even among insiders who had benefited from the operation, there was a feeling that it had gone too far,' said Ziegler.
Revelstoke's Guinness triumph misled him. He came to believe that public confidence went so deep that Barings' name on a share issue was enough to guarantee its sale. Revelstoke took an enormous punt in Argentina, and it went badly wrong. Tom Baring, one of the partners in New York at the time, wrote: `Verily, "a great Nemesis overtook Croesus." The line has never been out of my mind since the Guinness success.'What Revelstoke did was to underwrite a 2 million [pounds sterling] share issue by the Buenos Aires Water Supply and Drainage Company. That meant that Barings sent the money to Argentina before it had sold the shares, and the shares subsequently proved virtually impossible to sell.
Much of Barings' capital was tied up in South America, and since the continent was going to pieces, questions of confidence in the bank were raised. It was committed to paying bills amounting to millions of pounds, and there was not enough money to meet the debt. Moreover, interest rates were rising and money was tight. This was a classic recipe for a bank failure....
Great failures often follow great successes, it was ever thus.
