Celebrating success in the City is a dangerous pastime these days. But the joint venture signed five years ago between JP Morgan, the aggressive American investment bank, and Cazenove, the blue-blooded stockbroker, has proved — against the odds — to be a belter. It is a rare case of adding one and one to get three.

As we report opposite, five years after the venture was set up, some £950m will be distributed among Cazenove staff past and present in the coming weeks when JP Morgan completes a deal to buy the 50% it does not own. And it has paid for itself in spades.

The timing of the deal is unfortunate. Coming just a few weeks after Goldman Sachs, it will add to the hue and cry over excessive bonuses and general fat cattery. And the fact that some 65% of the proceeds will be shared by 80 people will shine a light on a very privileged section of society. What is more extraordinary is that three-quarters of those individuals no longer work at the firm and haven’t done for a number of years.

But this deal deserves close analysis. If ever wider society is going to accept a framework for remuneration (and there is no reason why it should) the method by which Cazenove’s former partners will be paid is close to the acceptable. The partners bought the shares and have held them for six years after incorporating to take advantage of a change in tapered relief tax. When the firm did the deal with JP Morgan it could have been a disaster.

You just have to recall the monster £4 billion price that Chase paid for Jardine Fleming to remember how bad things can get. Within a few months some 90% of the staff had been sacked.

The early days of the venture with JP Morgan were not easy either. The Americans looked down their noses at Cazenove. They saw it as a fading star that had slipped down the rankings. Compared with the high rollers at JP Morgan, the Cazenove partners, despite their heritage, occupied the cheap seats in banking, picking up small fees for advisory work.

JP Morgan had bigger ambitions and had a balance sheet it wanted to use. After some early losses of big clients, the business started to hum. Cazenove was reinvented, it had access to debt, bond issuance and other areas that hitherto its clients had never been involved in.

Then the joint venture caught the wave of overseas companies floating in London. The City became an important profit contributor to JP Morgan and helped it to become a bulge-bracket investment bank.

At a small gathering at Brooks’s, in the heart of London’s clubland, one of the top brass at Cazenove gave a farewell speech some months back. He said on behalf of his children and his children’s children that he would like to thank one man who wasn’t there.

That man is Ian Hannam, a deal maker who joined the venture from the JP Morgan side. The reason he was singled out is that he has helped shake up Cazenove and turn it from trusted confidant to a money-making machine. It was a flattering remark and there are others who have played a key role such as Cazenove’s David Mayhew and his chief executive Robert Pickering (who has since left). Cazenove holds Mayhew in high regard but some say his style is that of a big oak tree that doesn’t allow little acorns to grow in its shadow. The tie-up with JP Morgan clipped a lot of the lower branches, allowing more individuals to shine.

This joint venture now competes on a bigger stage — and in a world where financial mergers typically end in tears, it has been an exception to the rule.

Call it luck (certainly for the retired partners) or good judgment, but this combination has caught a wave that Cazenove would have missed if it had stayed independent. The partnership must be one that both HSBC and Royal Bank of Scotland wish they had spotted.

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