UK government rejects brokerage complaints over “bullying” by rescued banks
LONDON, Nov 17 (Reuters) – Britain’s government has batted away complaints from three top brokerages about “bullying” and unfair competition by bailed-out lenders, telling them to make a virtue of their independence or seek help from the consumer watchdog.
In a letter seen by Reuters on Tuesday, financial services minister Paul Myners told Panmure Gordon, Numis Securities and Evolution Securities to take advantage of their position outside “‘all-singing, all-dancing’ investment banks”.
“In my business career, I have appreciated the areas where many independent brokers and investment banks have an edge over some of their larger competitors including, inter alia, client intimacy, speed of response and a close-knit workforce,” Myners said in a letter to the three firms.
The chief executives of Panmure and Numis, and the chairman of Evolution had told Myners in a joint letter last week that “taxpayer-funded banks” — part-nationalised Royal Bank of Scotland <RBS.L> and Lloyds — were strong-arming clients into using their investment banking services.
The brokerages accused the banks of overstepping the traditional “relationship banking” model and said they should not be allowed make it a condition of lending that the client is then forced to use the bank’s in-house stockbroker.
In his reply, Myners said the brokerages should contact the Office of Fair Trading with evidence of unfair competition, and UK Financial Investments, which manages the government’s holdings in the banks, over any unethical behaviour.
But he also warned the government’s stakes in banks are being run on an “independent, commercial basis” and said client relationships were a commercial matter for the banks.
Myners also sought to clarify whether RBS and Lloyds — the largest but not the only recipients of state support — were the only banks seen to be guilty of “tying” products.
Panmure Gordon declined to comment. Numis and Evolution were not immediately available for comment.
(Reporting by Clara Ferreira-Marques; Editing by David Cowell) ((email@example.com; +44 207 542 3214; Reuters Messaging: rm://firstname.lastname@example.org))