Michael Cole-Fontayn, EMEA Chief Executive at BNY Mellon, is proud to be seen
as steady and a little old-fashioned. He, and his bank, are in it for the long
term, says Stefan Stern.
It takes courage to out yourself as a banker these days. They seem to have
joined journalists, estate agents and politicians at the lower end of the
reputation league table. But, undaunted, Michael Cole-Fontayn, Chairman in
Europe, the Middle East and Africa of BNY Mellon and Chief Executive of its
depositary receipts business, is not afraid to use the "b" word. "We show up as
a bank, so we're a bank," he says, with commendable clarity. BNY Mellon is, as
Cole-Fontayn explains, an agent not a principal - in other words, it deals on
behalf of clients rather than engaging in so-called casino banking, or
proprietary trading. It also has a rare AAA rating. But these are relatively
subtle distinctions that tend to get drowned out in "bash the banker"
conversations. Examine Cole-Fontayn's career, however, and you will see a side
to banking that is not about reckless risk-taking and excessive behaviour.
Indeed, after an hour in his company you tend to think that if only there were
more bankers like him there would be very little to worry about. His 27-year
career spans all the key moments in the transformation of the City. His
thoughts about what banking should and shouldn't be, therefore, carry
He joined the Bank of New York in London in 1984. It was a smallish but
well-known name in financial circles. He was promptly sent to New York for a
year's training in finance that involved learning the essentials of lending,
accounting and much else. He was back in London for the major changes brought
about by the Big Bang - the end of the City's closed shop in 1986 and the
arrival of powerful overseas players, in particular American and Japanese
institutions. These were also the Thatcher years of privatisations - huge
flotations of state-owned assets such as British Gas, British Telecom and the
electricity and water industries. The internationalisation of finance was
growing, too, and "depositary receipts" (simply put, a way of holding shares in
a foreign company) were a key element. Bank of New York was at the heart of the
action. Between 1993 and 2000 Cole-Fontayn was in Hong Kong, running Bank of
New York's Issuer Services Group. This involved getting to know the emerging
new stars of Chinese and southeast Asian business in the run-up to Britain's
"handover" of Hong Kong to China in 1997. The intricacies of Chinese business
took some mastering. There were H shares, N shares and B shares to get to grips
with. But what was clearly inspiring was the sense that a new business giant
was emerging in the East.
"Corporate managements were very creative," Cole-Fontayn says. "Everyone had a
plan, everyone was open to new ideas. There was very quick decision making."
Through this period Bank of New York grew rapidly. In 1992 it had 400 employees
in Europe; by 2000 (when Cole-Fontayn returned from Hong Kong) there were
4,000. And, crucially, the bank's conservative approach to risk protected it
from the volatility in financial markets at the start of the new millennium. In
the frothy, "new economy" markets of the late 1990s up to 2001, gurus declared
that the old rules of risk and reward had been fundamentally altered. Bank of
New York took a rather different view. "We were turning down deals at this time
because we couldn't understand how the credit risk had been calculated,"
Cole-Fontayn says. "We hold fast to that approach now: we don't do things we
can't understand." That is how you keep your AAA rating. In 2007 Bank of New
York merged with Mellon Financial Corporation to form BNY Mellon, a successful
deal studied in some depth by Professor Scott Moeller, Director of the Mergers
& Acquisitions Research Centre at Cass Business School.
The bank's relationship with Cass stretches over ten years and has involved
internships and extensive graduate and continuing professional education, as
well as a stream of MBAs. "I was a graduate trainee myself at the start of my
career, and I have great admiration for the quality of people we get to see
from Cass," Cole-Fontayn says. BNY Mellon is now a respected name in global
finance and a significant player in investment management through businesses
such as its London-based subsidiary, Newton. It is a trusted counter-party
offering a range of investor and custodial services. So no reckless gambling,
no underwriting, no extravagant corporate finance advisory work or
over-ambitious securities trading. BNY Mellon is an unashamedly old-school
servant-banker, here for the long term. This is business the way it used to be.
"My 27 years here have been a kind of rolling MBA," the Chairman says.
Stefan Stern is Director of Strategy at Edelman and also Visiting Professor of
Management Practice at Cass.