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Wealth Manager: B Capital on why the world needs boutique merchant banks

Wealth Manager: B Capital on why the world needs boutique merchant banks

Ultra-efficient, secrecy-ridden and not very good at bridging the cultural divide of working in the UK; these are the stereotypes that generally spring to mind when one considers the Swiss banking model.

Against this backdrop, running a boutique from offices in London and Geneva might seem like an additional headache for a new player, particularly given the regular drip-feed of less than positive news about Swiss banking, but this is how B Capital began life, with two offices set up simultaneously at launch in 2008.

The reason, founder Lorne Baring says, is that the mechanics of Swiss banking are ‘on an operational level, like stainless steel’, and as such he has sought to bring a touch of this ‘really good’ system to London through B Capital.

‘They really know how to run the operations of a bank and the regulators in Switzerland are less red tape and more pragmatism,’ he says, after spending a chunk of his career at Barclays’ Swiss office.

‘It was great to see how they do it because then I could transfer some of that back to London.’

Aside from a slick back office, the Swiss preoccupation with privacy is another element Baring has tried to emulate in the fledgling business, which was set up with Barclays colleague José Rebelo.

‘Even friends of mine in London are irritated by the lack of privacy. It seems all data is shared… it’s quite messed up. That’s where I think the Swiss are really good, they just protect your privacy.’

Baring agrees there is ‘no doubt’ the Swiss ‘do things differently’ but that there is a manner of ‘cold and calm, and that’s what a lot of people want’.


The business now runs $500 million (£319 million) in assets under management on behalf of 21 clients and has eight staff. The firm targets clients with a minimum €10 million of investable assets.

Baring is part of the Barings Asset Management family, and while opportunities to join the empire were no doubt plentiful, he insists he ‘didn’t want to use any favours’ and eschewed the open doors he could have been offered.

‘I did work experience, but I did it with other companies. I didn’t want any favours because you would naturally get that quizzical look as to whether you’ve pulled a string here or there. I was very anti-that.’

Despite the family connections, Baring maintains he had ‘absolutely no idea’ about the machinations of the business, simply having a general grasp of the family’s history, and says he remained ‘a proper novice’ until he finished his FSA exams. ‘I wasn’t reading the Financial Times at 16,’ he says. 

But his background in an illustrious banking dynasty that helped finance the Louisiana purchase has supplied more than one governor of the Bank of England and what he calls other ‘super interesting’ aspects of ‘high finance’ – has informed his plans for B Capital, however, as Baring says he would like to see the business grow to provide a merchant banking arm.

‘I think merchant banking is the best form of banking. And people don’t really know what that means anymore because it doesn’t feature very much.

‘But I believe that the best and most interesting form of banking is where the bank is providing finance to projects, while also investing itself and being a partner, as well as an arranger and a provider of finance. That’s where I’d like B Capital to develop,’ he adds.


The business has grown at a rate of around £100 million per year since launch and once it’s at a more mature stage, Baring hopes the business will more frequently invest in project finance. ‘It’s good to have skin in the game with the client, then your interests are totally aligned. It’s not just about lending the money and collecting the interest.’

This latter part, he says, is ‘a departure from a decade at Barclays’, a place where he learned the ins and outs of his favoured Swiss banking model, but nevertheless appears to have been left somewhat disillusioned. 

‘The scale of the big bank was too big for me,’ he reflects. ‘I felt that the scale couldn’t keep growing exponentially.’

Sensing the antidote was in a boutique, Baring set up B Capital with colleague José Rebelo, with whom he had worked for 10 years. 

 ‘I felt that the sense among the wider team was that there was too much large-scale operation and we needed to do this. He gave me that little shove to do it.’

Eton-educated Baring, who is fluent in Spanish, French and Portuguese, spent his twenties in the army, via a spell at Sandhurst. In the military he rose to become a company commander.

With this in mind, it’s easy to see why he would prefer helping to forge a path through the crowded investment landscape at a boutique to working for a global banking conglomerate. This is a man who is used to being in charge.

Baring also likes to compare manning a small investment operation to leading a team on a military mission, although he does concede that ‘many other jobs will seem quite easy in comparison’ with the army.


‘It’s really fun to be a boutique; it’s like being the commander of a unit again. You are doing the same mission as some of the bigger units but you have the flexibility to decide whether to turn left or turn right according to what you think,’ he says.

‘For us it’s great to be able to change our view quickly and adeptly, rather than having a very large house view.’

While bringing Swiss-style operations to the UK was an aim of B Capital, Baring has found his London base has helped him bring a wider perspective on the economic climate back to Geneva.

‘You get a really strong sense of what’s going on from London, which sounds funny but it is that way,’ he says. ‘Having a footprint there is very important.’ 

B Capital runs five different portfolio models, with the Balanced version up 4.2% in euro terms over the year to the end of March. While the portfolio is managed on an absolute return basis, this compares to an Apcims Balanced index return of 8.96%.

Baring is a staunch believer in exchange traded funds (ETFs) and their ability to add value over the longer term, and as such all equity exposure is made via passives.

‘I believe in the efficient markets theorem. Information is tightly controlled so does anybody know what Facebook is about to announce?’ he says. ‘It’s better to use asset allocation rather than stock picking.’

Portfolios still have a small 2% weighting to Europe, entirely invested in Germany. 

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