James Moore: Telling the truth has its price as Tesco dumps house brokers

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The Independent Online

Outlook The way Tesco tells it, the decision to dump long-time brokers JP Morgan Cazenove and Nomura was simply good housekeeping. The two had been in place for seven years, after all, and since then there's been a change of chief executive, with Philip Clarke now in charge, not to mention a rather notable change in the fortunes of the business. Having previously been described as "the supermarket that ate Britain", the last couple of years have seen the retailer suffering from corporate indigestion.

Based on that, of course it would seem sensible to freshen things up, and get Barclays on side as broker alongside Deutsche Bank (which has kept its job). After all, Barclays surely knows a thing or two about indigestion. Perhaps it can help Tesco out with some of its stash of Rennie.

And the brokers aren't the only messengers to have been shot, with a head of coms and a new PR agency to "help" with the media.

The fact that analysts at the two jilted brokers had cut their forecasts and expressed some scepticism about Tesco's prospects? Pfah. Move along, nothing to see here.

Still, at least someone among all those new communications people must have realised how it might look to the sceptical observer even if this is simply good corporate "housekeeping" .

The reliability of research written by the house has always been open to question, given the close relationship house brokers have with management, and the money they are paid by company bosses for their advice.

With brokers always on the hunt for business, and jobs at stake if they don't get it, the suspicion has long been that analysts will write favourable reports to keep everyone sweet whether as a direct result of pressure from their bosses or through seeing the writing on the wall and responding accordingly. It was once suggested during the last furore about analysts' recommendations, and the reliability of their work when their employers had a relationship with the companies they wrote about, that research put out by the house should be labelled as marketing material.

That idea was dropped and clearly house research on Tesco has been reliable and not at all influenced by the relationship. Except, of course, that they're not the house any more.