RBS considers its options on Hoare Govett

ROYAL Bank of Scotland is considering the sale or closure of Hoare Govett, its legendary broking business that has worked with many of the leading companies on the FTSE 100.

The bank, 83 per cent taxpayer-owned, is looking at several options for its investment bank, which could include walking away from the equities market entirely. It is believed to have asked management consultant McKinsey to provide advice on a possible restructuring.

RBS acquired Hoare Govett as part of its controversial takeover of ABN Amro in 2007 but allowed it to keep a separate identity in the hope it would retain a reputation for providing impartial advice.

Hoare Govett has held mandates with GlaxoSmithKline, BAE Systems and Tullow Oil, but a spokesman declined to comment on current clients or on the future of the broker. It also works with a series of mid-cap and smaller companies but has lost some mandates, such as toolmaker Charter International after its takeover by US group Colfax.

It remains a difficult time to make money from pure broking because the volumes of deals has fallen, a senior Square Mile broker told City A.M.

Last month Stephen Hester, the chief executive of RBS, signalled a shrinking of its investment bank arm by up to a third amid the Eurozone crisis, regulatory changes and the reforms proposed by the Independent Commission on Banking.

Broker ICAP and Canadian bank RBC Royal have previously been linked with a bid for Hoare Govett.

FAST FACTS | HOARE GOVETT
● Provides corporate broking advice and execution including research, sales and trading services to FTSE 100, mid-cap and smaller companies.

● Hoare Govett was also corporate broker to Northern Rock in the run-up to the crisis.

HOARE GOVETT CLIENTS PAST AND PRESENT
Babcock International
Services group which maintains Royal Navy submarines.

CWW
Demerged from the former Cable & Wireless Group.

Charter International
Engineer bought by Colfax after rejecting Melrose.

G4S
Security group scrapped plans to buy ISS for £5.2bn.

Informa
Publisher of Lloyd’s List, the world’s oldest newspaper.

Mouchel
Debt-laden infrastructure group builds schools and roads.

Sainsbury
Supermarket ditched HG in favour of Morgan Stanley.

Tullow Oil
Oil firm targeting growth in Ghana and Uganda.

Source: Morningstar and City A.M. research