British Bankers’ Association mulls merger in hunt for cash

Mark Kleinman
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SUPERMARKET own-label ranges, package holidays and ... City lobbying groups? Punters’ desire for value-for-money appears to be stretching further than ever in gloomy economic times.

That’s the conundrum confronting my fellow City A.M. columnist Anthony Browne, recently installed as chief executive of the British Bankers’ Association (BBA).

Relinquishing its role in supervising the Libor-setting process will cost the organisation millions of pounds, gnawing deeply into its revenue base and leaving it with a stark choice: to hike fees for members or risk denuding the BBA of the services they demand.

Browne has plumped for the former option. I understand that the BBA has asked its biggest members, the leading high street banks, to stump up as much as 25 per cent more for their membership, according to people close to the talks.

For some banks, that might mean an additional bill of £1.5m-a-year.

So determined was Browne to avoid the issue dominating last week’s BBA board meeting that he held bilateral talks with major lenders before it took place. That didn’t prevent his proposal earning a frosty reception.

The quid pro quo for agreeing to the plea for more cash was that the BBA should examine a merger with another trade body, such as the Council of Mortgage Lenders. That work is now underway, according to BBA executives.

Amid a protracted run of conduct-related fines which have left their reputation in ruins, Britain’s banks need a robust and respected trade association more than ever.

The odds on it continuing to exist in its current form have, however, suddenly lengthened.

If Tidjane Thiam had sold an insurance policy for every time his aborted bid for the Asian insurer AIA had been mentioned, Prudential would have been guilty of monopolising the market for life cover.

Over two years since its abandonment, the Pru chief is sailing in more serene waters: profits have soared and the share price has outspiked most of its rivals.

Yet there continues to be a hole in the Pru boardroom as it struggles to identify a senior independent director to replace Paul Manduca, who stepped up to the chairmanship earlier this year. The process to hand Manduca that role was hardly derived straight from the textbook, which was mildly embarrassing given the Pru’s ownership of M&G, one of the City’s biggest fund managers. Still, in the context of corporate governance disasters past, it merited a footnote at most.

Among those approached about the senior independent’s role, I understand was Guy Dawson, a former investment banker at Nomura. The talks broke down and the Pru’s headhunters are back at the drawing board.

Given the Pru’s often-fraught relations with investors during the last decade, it’s hardly surprising that a frontline role dealing with them is warily viewed.

That, though, overlooks the quality of the job that Thiam has done since the AIA bid collapsed. Expect the Pru’s boardroom vacancy to be filled before long.

What’s going on at Permira? The titan of European private equity and owner of companies such as Birds Eye Iglo is making stuttering progress towards a £2bn target for the first closing of its latest fund.

Few doubt that it will get there before an informal deadline it has set for investors early next year. Insiders say, though, that the lukewarm reception may mean the firm scaling back its eventual target for the fundraising.

Permira is hardly alone, as limited partners reassess asset allocations and take a tougher stance on management fees. A string of redundancies at Permira’s network of international offices feels like the thin end of the private equity wedge.

Mark Kleinman is the City editor of Sky News. Twitter: @MarkKleinmanSky