* Seymour Pierce declines to comment
* Potential investors are from overseas – source
* Tough conditions spurring consolidation among UK brokers
LONDON, March 16 (Reuters) – Seymour Pierce, a British
investment bank which recently ended merger talks, is in talks
with several potential investors, a source with knowledge of the
matter said, as tough market conditions spur consolidation among
smaller stockbrokers.
“They are holding discussions with a number of potential
strategic investors,” the source said on Friday, adding they
were from overseas.
Seymour Pierce, owned by its staff following a management
buyout in 2003, declined to comment on the matter.
While Seymour Pierce had ended 40 million pound ($63
million) merger talks with Bermudan reinsurer Gerova Financial
Group, it has still been seen as a possible bid target
– other small investment banks have been taken over in the tough
climate.
Investment banks have seen less business come through in the
way of flotations or mergers and takeovers due to the global
economic weakness, and smaller ones have found it harder to deal
with increasing regulatory costs than bigger rivals.
“The big question for the industry is how it will
consistently generate a return on equity above the average cost
of capital. This is a very tough ask in the current environment
and the challenge for management will be to continue driving
down costs to match reduced revenue levels,” said Bill Michael,
head of UK financial services, at accountancy firm KPMG.
Continued…
