John Collins: Decorated Motor Torpedo Boat officer who went on to become a leading banker

His mustard gas injuries brought to light the illegal cargo carried by the US ship SS John Harvey

Collins: modest to the point of shyness but with a clear moral sense

ASecond World War American Liberty ship carrying liquid mustard gas almost ended the life of future merchant bank chairman and racehorse owner John "Tim" Collins before his long run of winning streaks began. Collins, whose judgement of people and affairs made him one of the City's most highly regarded, loved and respected figures, never spoke of the wartime actions that brought his appointment as MBE and won him the DSC and Bar, nor did he ever return to the Adriatic ports and harbours in which his own valour was proved.

He was among the élite band of Motor Torpedo Boat officers brave enough to save lives by plunging into the blazing, toxic waters of the crowded harbour at Bari on 2 December 1943, after a German air raid sank 17 ships, killing more than 1,000, and caused the explosion of the American SS John Harvey and a petrol carrier.

With the deep, suppurating blisters the mustard gas caused, the 20-year-old Royal Navy Volunteer Reserve sub-lieutenant was taken to hospital. So secret was the John Harvey's cargo, banned under the Geneva Protocol since 1925, that no one left alive knew about it until the injuries of men including Collins made its presence clear. Both the British and American governments hushed up the disaster. Collins was among a handful of officers decorated on the authorisation of a shamefaced Churchill, and made MBE in 1944.

He was back in the Adriatic the following year with 28th Flotilla, Coastal Forces, led by Lieutenant Charles Jerram, smuggling the Yugoslav partisans of Marshal Josip Broz Tito in and out, and attacking enemy shipping. The DSC and Bar were awarded for his part in raids including the wrecking of a large enemy merchant ship at Parenzo on the night of 7-8 February 1945, the sinking of an enemy merchantman on 9-10 March off Umago, and the sinking with a single torpedo of two of five enemy vessels sighted on 10-11 March between Caorle and Tagliamento.

On the last occasion Collins fired the port torpedo from Vosper MTB 406, in which Jerram was embarked. "Columns of water rose about 200 feet in the air," Jerram reported. "All five lighters were sunk, and of these two were sunk by S/Lt Collins." The MTBs' exploits are recorded in Dudley Pope's Flag 4: The Battle of Coastal Forces in the Mediterranean, 1939-45 (1st edn, 1954).

After the war Collins served as Flag Lieutenant to Admiral Sir Henry Pridham-Wippell, Commander-in-Chief, Plymouth, and while in that port met the Wren officer who became his wife: Gillian, daughter of the merchant bank director and future chairman Randall Hugh Vivian (always known as "Rufus") Smith, from 1956 second Baron Bicester.

The couple married in 1946, and on leaving the Navy Collins elected to join his father-in-law's bank, Morgan Grenfell (now part of Deutsche Bank), in preference to going into his own family's fur business in Birmingham. He was sent for two years' training to the bank Glyn, Mills and Co, now part of Bank of Scotland, and later sent abroad for a year, working at Morgan Grenfell's American cousin, JP Morgan & Co, in New York, and with an associated firm in Canada. His career is recorded by Kathleen Burk, who interviewed him for her book Morgan Grenfell: 1838-1988, (Oxford University Press, 1989).

An invitation to become a director of Canada's Hudson's Bay Company prompted Collins' appointment to the Morgan Grenfell directorship. He contributed to the business an expert knowledge of the British steel industry, handling the sale of stocks and shares of the most important of Britain's recently denationalised steel companies in February 1961. He also played a major role in the takeover by American Ford of UK Ford in the same year.

The sudden death of Lord Bicester's successor as chairman, Sir John Stevens, put Collins into the chairmanship of Morgan Grenfell Holdings from January 1974. During his time the business expanded abroad to places including Rome, Singapore, Hong Kong, and Moscow, and acquired a reputation as one of the City's best in corporate finance. From 1974 Collins was also chairman of Guardian Royal Exchange Assurance Group, a position he held until 1988.

Collins, always known as "[tiny] Tim", a nickname from the Navy referring to his 6ft 6in height, acquired the title among friends of "The Commander" after a sensational win at roulette at Le Touquet in the 1940s, but his most renowned peacetime victories were in horseracing. JEH Collins became a name known in the racing world for his ownership of great steeds, in particular one of the most celebrated steeplechasers, Remittance Man, which won the 1991 Arkle Challenge Trophy and the 1992 Queen Mother Champion Chase at Cheltenham.

The gelding, trained by Nicky Henderson, liked to have a sheep for company. It made a sparkling comeback to cheers and tears after injury to win the Emblem Chase ridden by Richard Dunwoody at Kempton Park in 1994. Other horses Collins owned were King's Banker and Tudor Fable.

Collins was born in South Africa, where his family had set up in business after the First World War. They returned to Britain because of his delicate health as a baby, and he was educated at King Edward's School, Birmingham, and Birmingham University.

Friends knew him as a man of few words, modest to the point of shyness, but with a very clear moral sense, and an ability to make wise decisions and carry board members with him. His qualities were, one former colleague said, rather like the overcoat of which the Hudson's Bay Company traditionally provides a fur lining for its directors so that they can withstand the Canadian cold: "sober on the outside, but terrific inside." Collins's grey herringbone coat had a lining of the very finest mink.

In retirement Collins used a buggy to attend races after injuring his spine while fly-fishing in Scotland. He was one of the 25 elected members of angling's exclusive Houghton Club. He was a Deputy Lieutenant of Oxfordshire from 1975 until 1996 and in 1975 High Sheriff of Oxford.

John Ernest Harley Collins, soldier and banker: born Durban, South Africa 24 April 1923; MBE, DSC and Bar; married 1946 Gillian Smith (died 1981; one son, one daughter), 1986 Jennifer Cubitt (two stepdaughters); died Oxford 4 September 2012.