Institutional shareholders urged to launch bank probe, City minister claims

29 March 2010

Institutional shareholders need to launch their own investigation into investment bank fees on the sale of shares, the UK’s City minister has claimed.

Lord Myners made the plea while attending a conference on corporate governance.

“There is a real opportunity for shareholders to show that they are acting on behalf of their clients and launch a public inquiry,” he explained.

The minister added that while he did not think an inquiry would actually go ahead, he would like to be proven wrong.

He added: “Investors do have teeth - this is the extraordinary thing about it. They both own the business on behalf of their clients and they also generate huge amounts of revenues for the investment banks.”

The politician also said that certain features of investment banking show signs of a “semi-oligopolistic market”.

According to reports, shareholders are becoming increasingly concerned by the amount of money banks have to pay for rights issues.

Prudential is currently preparing the largest rights issue ever implemented as part of a bid to fund the takeover of AIG’s Asian insurance unit.

The insurer will pay $735 million in fees for the $21 billion bond sale.

By Jim Ottewill

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