return to San Francisco retells the growth story
You can trust a cab driver to give it to you straight. The one driving Euromoney to a meeting in San Francisco one morning last month narrowly missed clipping a pedestrian who had ambled into the street without looking. “Chinatown used to be the area of the city where we get most trouble from pedestrians crossing the street without looking,” he says in a tone lacking any of the condescension many cabbies tend to use on things that get in their way. “But in the last few months the financial district is where we have to be most careful. These guys must have got so busy all of a sudden.”
He’s right, and for many in the Bay Area it’s not before time. The first few years of the new millennium were not pleasant ones for those in the financial markets in San Francisco. Having become the focal point for the rapid growth of the technology sector that fuelled the US in the 1990s, the Bay Area’s decline after the market collapse five years ago hit particularly hard.
But it was during the boom itself that the city had surrendered or lost much of its home-grown financial muscle. In 1998, BankAmerica merged with NationsBank. The merged bank’s HQ moved to Charlotte, North Carolina, and many of the investment-banking operations gradually moved to New York.
Two of the boutique investment banks that had grown in the Bay Area and had led the way in bringing the tech sector to the rest of the US had already gone. In June 1997, a year before the merger, BankAmerica had bought Robertson Stephens, and three weeks later NationsBank had bought Montgomery Securities. After the merger of the two big banks Robertson Stephens was sold to FleetBoston.
These were two of the Four Horsemen, the boutique investment banks specializing in tech and growth companies. Bankers Trust bought another, Alex Brown, in 1997 before both were subsumed into Deutsche Bank at the end of 1998. Meanwhile Chase snapped up Hambrecht and Quist in autumn 1999.
The Four Horsemen selling up was the harbinger of doom for the tech sector, and for the Bay Area’s prosperity. By 2001, as it began properly to dawn on people that the April 2000 Nasdaq crash was not just an aberration, discussing the number of pre-sale employees still at the Four Horsemen had become a popular conversation piece: did you know there were only eight original staffers left at H&Q, or 20 at Montgomery Securities, people would say.
Robertson Stephens fared the worst. FleetBoston decided it didn’t like the business, and tried to sell it in the middle of the downturn. In the end, in 2002, the Boston bank simply closed it.
By this stage only two big financial institutions were left in the city: Barclays Global Investors and Wells Fargo. Those who had previously worked in financial services in the area were at a loss.
Now, there’s a different feel to the city. It’s more difficult to get to for a start. Highway 101, the main route into San Francisco from both the north and the south, is back to gridlock status, even at weekends.
The Presidio, the old US Army base up by the Golden Gate Bridge, is getting ready for some new tenants: in July Lucasfilm is moving in from San Raphael, an hour’s drive or so north on Highway 101, all 2000 employees or more.
The re-emergence of capital markets activity in the past 12 months has been a boon for the city. And having some heirs to the legacy of the old Four Horsemen is restoring some of the Bay Area’s financial pride.
