E&Y highlights lack of UK corporate brokers
The uniquely British institution of the corporate broker is under threat, threatening to leave CFOs and finance directors without an independent source of advice, according to Ernst & Young.
The possible flotation of Lazards and the joint venture of Cazenove with JPMorgan alter the status of two of the biggest corporate brokers in the UK - Cazenove currently advises 41 and Lazards advises three of the FTSE 100.
Although many of the large banks do offer brokerage services to companies in the UK, including Merrill Lynch, UBS and ABN Amro (under the title Hoare Govett), many value the independence that houses such as Cazenove and Lazards offer.
Pearse Rutledge, Ernst & Young partner, said: "Nothing has fundamentally changed, a CFO still needs a trusted advisor. Who is left to provide a CFO or group treasurer with impartial and independent advice?"
All firms listed on the London Stock Exchange are obliged to have a broker to act as a sounding board for investors. In the rest of Europe and the US, many investment banks claim to provide the same service but fall short of the independence a brokerage provides.
As Tim Wise at Cazenove put it in CF's April 2004 issue: "A number of the US investment banks see the broking role as a launch pad to something else - there is a product drive.