Threats of litigation against Barings and its new Dutch owner, ING, grew yesterday as a number of fund managers banned dealings with the bank.
Some institutions which used to employ Barings' broking skills said they would hold back business for a few months to see if the old management tainted by the bank's collapse was cleared out, and Barings had shown it can hold on to its best staff.
"There is a general wait-and-see attitude; people want to know that the Barings' house really has been put back to order," said one fund manager.
The strongest pressure was from institutions holding Barings bonds, which are now almost worthless, because ING will not honour them. Iain Watt, managing director of Edinburgh Fund Managers, has told ING he will not deal with Barings securities until EFM gets satisfaction on its £600,000 holding.
"I wrote to ING on 10 March, saying you cannot pay out to ordinary shareholders and then refuse your preference bondholders. But I have had no reply. There are a lot of Scottish companies no longer dealing with Barings," said Mr Watt.
Scottish Equitable Life Assurance has also excluded Barings from its dealing list.
A senior Barings executive said:"There are lots of angry big investors out there, and the only real leverage they have is to refuse to give us commission business - it is a natural negotiation stance."
Scottish Amicable is a member of a bond holders' committee at the Association of British Insurers which is lobbying ING. Some institutional bond holdings are in excess of £1m. Private bondholders have set up a seperate action group to examine the potential for legal redress.