A few summers ago, I was invited to a dinner of City bigwigs. Our host boasted that the 20 people round his table controlled three-quarters of UK plc. When asked about increasing US domination of the UK stock market, I was alone in feeling concerned - or indeed, having even noticed it. How different this summer is.
It's a long time since a bid has tugged at the heartstrings of quite so many people as the Marks & Spencer one. Media coverage reflected the extraordinary role that company has in British life. Poor old Amelia Morris had the press camping round the clock on the front lawn of her suburban home. Oh, you don't know Amelia? She is the retail analyst for Brandes, the secretive Californian investment company that turned out to be the largest M&S shareholder (17 per cent at peak). You probably don't know Brandes either.
You should do. In the current battle for Abbey National, it is once more Brandes (holding some 8 per cent of shares) that is the power broker (joined by Fidelity and Franklin Resources). Indeed, the list of Brandes' stakes in UK plc is mighty impressive. They own 7 per cent of both British Aerospace and J Sainsbury, 9 per cent of ICI, 12 per cent of Corus (the old British Steel), 8 per cent of Royal & SunAlliance, 7 per cent of British Energy, etc etc. They are just one of our new American owners.
How has this happened? In part, it is of course, simply a reflection of the American financial colossus: the scale of the US capital stock is such that relatively small diversifications overseas mean chunky stakes in non-US companies. Many of these cases also result from the fashion for "value investing".
More importantly, it reflects the success US fund managers have had in persuading UK pension funds to sack their local managers and appoint them. The Americans have basically entered this market and either bought the local players or ripped their heads off. Looking down the list of the largest active fund managers for UK pension funds, one quickly spots Merrill Lynch (2), Capital (5), State Street (6), Fidelity (7). Throw in a chunk of Deutsche (1) and UBS (4), where I am told decisions are made more and more in New York, and you pretty much have "full house" in the top 10.
At my bigwigs dinner, the line then was "what did it matter if Americans owned UK plc, anyway?" I find this attitude incredible. Of course it matters. US investors are not afraid to use their muscle. Apart from the Abbey and M&S bids, consider their role in Britain's boardrooms. Sometimes they put in whole teams, like at Colt Telecom, where Fidelity owns 30 per cent of the company and picked the chief executive and chairman.
The ousting of The Daily Telegraph's ultimate chief, Lord Black, was at the instigation of New York's Tweedy Browne. Fidelity thrust the knife into Michael Green's back at Carlton to form ITV, while the removal of Piers Morgan as editor of the Daily Mirror reportedly followed discussions with big holders Capital, Fidelity and Tweedy Browne. Tweedy who? You might well ask. Mr Morgan's case is of added interest. Tweedy Browne spoke of its concern that the paper's anti-US stance on the Iraq war was affecting the company's reputation. This has dangerous political overtones.
Equally, are some of the American corporate model's failures being imported here, as US shareholders recreate their climate of short-termism with large rewards for the top few, cost-cutting to the bone and everything driven for the next quarter's earnings?
Many of those bigwigs sitting round that table have themselves felt some American steel beside the backbone. I wonder if they begin to see now why who owns Britain matters?Reuse content