LONDON, May 28 (Reuters) - British lender Royal Bank of Scotland is set to appoint a new corporate broker to replace Hoare Govett, which it sold to American investment bank Jefferies in February, a source familiar with the situation told Reuters on Monday.
RBS, 83 percent owned by Britain, will begin a tender process to find a new broker, the source said, ending its ties with the historic British stockbroker acquired as part of its troubled takeover of Dutch bank ABN Amro.
“RBS has started the tender process to appoint a new broker,” the source said.
JP Morgan, Goldman Sachs and Morgan Stanley were in the frame to take over the mandate.
Jefferies has faced a struggle to retain Hoare Govett’s top British clients since buying the business for a nominal sum, reported to be 1 pound, in February.
Pharmaceuticals group GlaxoSmithKline, security services firm G4S and oil and gas company Tullow Oil are among former Hoare Govett clients which have changed brokers this year, although all three were already reviewing the situation before the acquisition by Jefferies.
RBS sold Hoare Govett as part of its retreat from investment banking having come under pressure from the Conservative-led coalition government to focus on retail banking rather than its riskier investment banking arm.
Hoare Govett had been one of the most historic and prestigious brands in British stockbroking for much of the 20th century, along with Cazenove, and analysts felt its brand value had been diluted when it was absorbed into ABN Amro.
A mainly British phenomenon, corporate brokers offer advice to clients for minimal fees, usually in the hope of winning more lucrative business, such as mergers and acquisitions or equity fundraising further down the line. They also act as a go-between for their clients and investors.
RBS declined to comment.