The remaining houses – Flemings, Rothschilds, Schroders, Smith New Court and Kleinwort Benson – must be swift to learn the lessons if they are not to go the same way. The day of the small, amateur British player, trying to fight on all fronts, is over.
Barings, and to a lesser extent Warburg, may have largely brought it on themselves but it is also the case that their domestic franchise was probably always too small to give them the critical mass necessary to compete on a global scale. There will, ofcourse, be a continuing role for small national niche players in the world’s financial markets, but, for the next 10 years at least, the global reptiles, backed by state-of-the-art management systems, information technology and, most important of all, the big balance sheet, will rule. The Barings collapse may be the fall from grace that everyone will remember but the Warburg one is the more important, the one that symbolises the demise of the independent British securities house. By all accounts the deal is virtually done, but even if it stumbles at the last fence, Warburg is finished as an independent investment bank.

This is the third profits warning within a year; few companies ever come back from the sort of bad news that has dogged Warburg over the past six months. Fair wind allowing, Swiss Bank Corporation now looks as if it will save Sir David Scholey the pain of having to try. If anyone had any doubt of the seriousness of SG Warburg Group’s position, yesterday’s warning that profits would be “very significantly below the recent range of forecasts” must surely have removed it. Whitbread is achieving a 17.5 per cent return on its investment in this business.Pub food, coupled with a shift in drinking habits to higher-margin premium beers, is also a prime part of the company’s expansion plans.Beefeater’s sales rose 7 per cent last year, generating a 12 per cent increase in profits.Most of the growth is coming from the family sector.The number of children accompanying adults to a pub restaurant has virtually doubled in the last two years, according to statistics compiled by Taylor Nelson, the market research group.The group’s Pizza Hut business, however, was affected by last year’s hot summer weather and profits fell by an unspecified amount.However, Mr Thomas remained confident about the long-term future despite the fierce price competition in the market.Investment Column, page 34. Borrowing as a percentage of shareholders’ funds is 2.6 per cent, and cash flow will ensure the figure does not rise much above 6 per cent this year.Sir Michael Angus, chairman, remained coy, however, about Whitbread’s plans for a big acquisition.The company recently withdrew from bidding for Courage, the second largest brewer in the UK.He refused to comment on strong rumours that Whitbread was looking to buy Allied Domecq out of its joint brewing venture with Carlsberg, known as Carlsberg-Tetley.The expansion plans were announced with results for the year to 25 February, which produced underlying growth of 10.1 per cent in profits before tax to £255.1m.The figures, accompanied by a 7.4 per cent dividend increase to 20.2p, were well received by the City and the shares rose 10p to 573p.Profits improved in all divisions, encompassing brewing, leased pubs, tied pubs, and restaurants and leisure.Star performers were Travel Inns, at the budget end of the hotel market, and Beefeater and Brewers Fayre, which are benefiting strongly from the general growth in the eating-out market in the UK.David Thomas, director of restaurants and leisure, said five more Travel Inns would be opened this year and there were plans “in the pipeline” to add another 25-30 outlets.This would take the number of hotel rooms from 2,840 to more than 4,000.New Travel Inns, where possible, will be sited alongside Whitbread’s pubs.Only five of the current 66 hotels are managed separately or on stand- alone sites, with 47 housed next to Beefeater pubs, 13 next to Brewers Fayres, and one at a TGI Friday’s.Budget hotels, typically priced at £34.50 a night for a room for four, is by far the fastest growing part of the hotel market. The expenditure compares with £282m in the year to February and £194m in 1993-94.
Besides expanding existing businesses such as Beefeater, TGI Friday’s, Pizza Hut and Travel Inn, the company will develop Hot Shots pool bars, Hogs Head cask ale bars and PJ Peppers, a wine bar.Whitbread’s balance sheet can cope easily with the increased spending.

Whitbread will create more than 2,500 jobs this year by spending more than £300m on expanding its pub, food retailing and hotel operations. He went into property in 1978 by buying Rosehaugh, but stood down as chief executive at the beginning of 1992 when the company reported pre-tax losses of £226m, a year before finally calling in receivers In 1987 the Bradman family stake was said to be worth £44m. In the Eighties Mr Bradman became increasingly involved in big social campaigns including anti-abortion.. He moved into tax work and spotted loopholes that saved clients millions. But David Hunter of ScotAm said he was confident that building, which could take two or three years, would start at the beginning of next year.The plans envisage new tennis courts and other facilities for the Vanderbilt Racquet Club, a former haunt of Princess Diana that is located on the site and is a member of the consortium.The son of a Willesden shopkeeper, Mr Bradman left school at 15 and qualified as an accountant.

The benefits are many – 2,500 new local jobs, training initiatives, new shopping and leisure provision, enhanced public transport and pedestrian and cycle links, new homes and the upgrading of Shepherd’s Bush town centre.”Like the Broadgate development, the White City scheme is an important piece of urban regeneration in an area of considerable blight, an industrial wasteland by the side of the M41 spur road.Not only does it mark the return of one of the property industry’s best- known figures, it confirms Mr Gummer’s determination to promote town centre developments to stem the movement of shoppers to out-of-town schemes.As a speculative development, it is also one of the biggest votes of confidence of the business cycle in the strength of the commercial property market.Details are still being negotiated, but funding is likely to come from Scottish Amicable, Mr Bradman’s partner in the consortium.The group still needs to tie up ownership of the site, which is half- owned by BICC and Railtrack, which had planned a rival scheme. John Gummer, Environment Secretary, welcomed Mr Bradman back to the fold this week with the announcement that he had decided not to scrutinise proposals for a 35-acre shopping, leisure and residential development in west London.
The project has already received the go-ahead from Hammersmith and Fulham, so Mr Gummer’s decision gives the green light to one of London’s biggest retail projects since the Brent Cross shopping centre.The scheme will include 620,000 square feet of shopping, including a food superstore, and 70 low-cost flats.Mr Bradman, best-known for his half-share in the Broadgate office complex in the City, said: “This is good news for Shepherd’s Bush. Chrysler reported that car and light truck sales were down 18.1 per cent.. Godfrey Bradman, conservationist, health fanatic and Prince Charles’s favourite property developer, is back with a £450m scheme, three years after bowing out of Rosehaugh, one of the property slump’s highest-profile failures. As well as failing to find financing for it, Mr Kerkorian also lost his principal Wall Street investment bank advisor on the putative deal, Bear Stearns.Poor sales results for the first quarter have also bolstered Chrysler’s contention that it would be wrong to plunder the company’s $7.3bn cash cushion, as proposed by Mr Kerkorian in his takeover plan. At current market prices that would cost the car giant almost $1bn (£600m).Confidence is reportedly rising within Chrysler that the Kerkorian bid, made in association with Lee Iacocca, the former Chrysler chief executive, has become less of a threat since it was unveiled a month ago. Plans were also made to fly big investors to Michigan for a special summit at Chrysler headquarters.
The cancellation comes amid unconfirmed reports that Chrysler is preparing to buy back the near 10 per cent stake held by Mr Kerkorian’s Tricinda company.