A Brief History of Barings

In identifying The Baring Archive as a relevant historical source, it is helpful to have details of the evolution of the firm and of its functions.

Beginnings

The firm traces its origins to John Baring of Bremen, who settled at Exeter in 1717 and set up in business as a merchant and manufacturer. He became one of the leading businessmen in the West Country. In 1762, his three sons established the London merchant house of John & Francis Baring & Co, later known as Baring Brothers. This house traded on its own account, and on joint account with other merchants, buying and selling commodities and other goods in British and overseas markets. It also acted as London agents for overseas merchants, arranging shipping and insurance, and making and collecting payments. This led on to financing the trading activities of these merchants through the provision of advances to them and by accepting their bills of exchange. This banking business was a mainstay of the firm’s work from the eighteenth until well into the twentieth century.

The Nineteenth Century

The speculative and high risk business of commodity trading had been greatly reduced by the late-nineteenth century while, at the same time, the work of issuing securities for governments and businesses, especially railway companies, was greatly expanded. For much of the nineteenth century, Barings vied with Rothschilds for leadership in the London capital market. Issuing began in the 1770s when the firm became a contractor for British government consuls at a time when the government required finance to meet the cost of the British war effort in North America. This business was more important during the French Wars, from 1793 to 1815, when the house emerged as the most powerful merchant bank in Europe. Barings also acted as paying agents. In this respect it was particularly associated with the Argentine, United States, Canadian and Russian governments. Other overseas clients ranged from the Canadian Pacific Railway Co to the Buenos Aires Water Supply & Drainage Co Ltd.

The Emergence of Corporate Finance

Towards the end of the nineteenth century, work for domestic companies commenced, beginning with the flotation of Arthur Guinness Sons & Co Ltd in 1886. Other early British corporate clients included Whitbreads, the Manchester Ship Canal Co Ltd, Vickers and the London Omnibus Co Ltd. Between the wars, when the London capital market was closed for long periods to overseas borrowers, transactions for British businesses became much more important. Now general corporate finance work was undertaken for the first time, beginning in the 1920s with the reorganisation of Armstrong Whitworth, a major engineering company, and continuing with the rationalisation of the Lancashire cotton textile industry through the creation of the Lancashire Cotton Corp. After 1945 corporate finance work for British businesses, fund management for pension funds, institutions and individuals, and banking formed the firm’s three principal divisions.

Internationalisation and Reorgansisation

From the late-1970s and the abolition of exchange controls, the firm’s business once more became internationally spread while in the 1980s international equity broking emerged as another major area of the business.

In 1969 a majority equity stake was transferred to The Baring Foundation, a newly-established charitable company. A further reorganisation took place in 1985, with the establishment of a new top level company, Barings Plc. Ten years later Barings became insolvent as a result of unauthorised trading by one of its employees, Nick Leeson, and its business was acquired by ING of the Netherlands. Some of Barings’ activities were integrated in ING’s business units, while other parts were closed down or sold - the asset management arm of the business, Baring Asset Management, was bought by MassMutual Financial Group in 2004.

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