Back to the future for banking

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Salamanca's Martin Bellamy digs deep for answers, writes Jonathan Russell.

Martin Bellamy is delving into the past to find the future. The Rifles officer turned chief executive of Salamanca Group knows his industry is in trouble.

But instead of distancing himself from investment banking, Bellamy is digging deeper into its roots in order to find the solution to its problems.

The answer, according to Bellamy, doesn't lie in the algorithms and proprietary trading desks of modern investment banks, but in the personal relationships and attention to detail that characterised merchant banks of 80 years ago.

"The investment banking model is under huge pressure and will only come under more pressure," said Bellamy.

"Through the financial crisis we thought it was critical for our business to adopt the merchant banking model that had all but disappeared for 80 years. Something that was entrepreneurial, well respected, and was largely dealing with concrete assets such as infrastructure, real estate, logistics and mining."

That this traditional view of business should come from a former army officer rather than someone who cut his teeth in the City perhaps shouldn't come as a surprise. That it has been so effective perhaps should.

While the larger investment banks have been chasing volume, Salamanca has been picking up clients one by one.

By focusing on individuals with in excess of $25m to invest Salamanca has built up a client base suporting an investment portfolio that currently stands at in excess of $2bn.

The investment is largely spread across Salamanca Capital's five divisions, private equity, real estate, corporate advisory, resources and family office and wealth management.

By offering to manage every element of client's financial affairs, from buying and selling property and aircraft to advising on investment and even security Bellamy is attempting to ape the model that was developed by one of London's most famous banking names, Robert Fleming & Co.

"We understand the environment of our investments from top to bottom," explains Bellamy.

"We believe in a return to ethos of merchant banking developed in London 100 years ago or more. You cannot properly service clients unless you are in a trusted relationship."

As a result the Capital (Other OTC: CGHC - news) arm works hand in hand with Salamanca Risk. This wing alloys political and business intelligence to forensic accountancy.

It also provides protection services ranging from shepherding journalists in war zones to ensuring the safety of assets such as mines and oil rigs and the staff who operate them.

The company has 100 permanent staff with 60pc based at the Mayfair headquarters. It also maintains offices in places as far afield as Cyprus, Poland, Bulgaria, Romania and Brazil.

The firm has an increasing string of completed deals. In December 2011 Salamanca saw China Polymetallic listed in Hong Kong 24 months after the company committed funds albeit that the listing came in at the bottom end of price expectations.

Early stage investment in China is not undertaken lightly. The group went forward after a detailed in house analysis of the risks and rewards in house a sharp contrast to the investment banking model currently under sceptical examination following the financial crisis of 2008, as Bellamy points out.

The firm is also involved in a $100m bulk storage project in Brazil. "Brazil has always been a 'nearly economy' but we selected it as a key area for investment based on its landmass, population and wealth of resources but with challenges caused by poor infrastructure the kind of challenge we understand and can meet," Bellamy says.

All this may seem a long way away from Bellamy's roots as a Rifles officer and even further away from a recent adventure attempting to row across the Atlantic. But there are parallels and they are all about drive.

Asked about his worst experience on the 2000 mile rowing race, Bellamy does not mention the privations and exhaustion. "It was when I realised we weren't going to be one of the fastest in the race," he says.