If you thought it was only conspiracy theorists that saw the City as a mutual back-scratching club of old boys acting entirely in their own interests, think again.
To sell a £1.7bn stake in the Royal Mail, the Government had to hire an investment bank to recommend seven investment banks to persuade other investment banks to buy the shares.
These same bankers and their fund-manager peers deal with each other on dozens of similar deals through the year. This time, it was Lazard acting for the seller, UBS and Goldman Sachs among those liaising with the buyers. Next week, on the next deal, it will be UBS advising the seller, Lazard talking to buyers. Same names, same faces.
Of the seven investment banks doing the selling, at least five were also doing the buying – or at least, their banks’ fund management divisions were. They say there are strict Chinese walls between departments and their senior executives. We have to take their word for that, and believe the brickwork extends to the golf course and wine bar.
The National Audit Office says the Government should not have relied so much on Lazard’s advice – it should have found a valuer outside of the City. Nice idea, but as the business and energy minister Michael Fallon told The Independent last night: “Whose advice should we have taken, a doctor’s?”
The fact is, despite all the talk of breaking down the too-big-to-fail banks that run the City and Wall Street, there are, since the financial crisis, even fewer, more powerful banks now than ever before. Conflicts of interest are growing, not declining in number.