City & Business: Higher hemline, please

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BRITAIN is obsessed with secrecy, and our merchant bankers are the worst of the lot. Until this year they were allowed to conceal their reserves and make secret transfers to and from the profit and loss account. This made a complete joke of trying to interpret their published accounts.

In fat years they could add to the reserves, understating their true profits; in lean years they could conceal their losses or overstate their profits by topping up from reserves. The idea was to smooth lumpy profits so as not to frighten depositors. New European Union rules have put a stop to this.

Last week Schroder finally came into line, one of the last to do so, revealing pounds 102m salted away for a rainy day. George Mallinckrodt, the chairman, said: 'The hemline is lifted a little bit higher than in other years.'

Well, yes, we may be getting a glimpse of ankle, but not much more. Schroder, Warburg and others keep disclosure to a level that would be unacceptable in any other industry. Interim reports tell you virtually nothing. The full-year profits are broken down no further than a split between fund management and 'investment banking' - which covers a multitude of activities.

Investors need to know more about what merchant banks are up to, especially as they venture deeper into riskier areas such as proprietary trading. Come on, George, show a bit more leg.

Jeremy Warner is on holiday.