Halifax sacks SBC Warburg as float adviser

NIGEL COPE

Britain's biggest building society, Halifax, dealt a body blow to SBC Warburg yesterday when it dropped the investment bank as its financial adviser and lead stockbroker for its pounds 10bn flotation on the stock market next year. The controversial decision will cost Warburg tens of millions of pounds in lost fees and savage its already wounded reputation in the City. Compensation for lost fees is considered unlikely.

Halifax, chaired by Jon Foulds, said its decision arose out of the "management relationship" with Warburg and a potential conflict of interest. The main reason behind the decision is Halifax's dissatisfaction with the new style of merchant banking at Warburg since its takeover last year by Swiss Bank Corporation.

The building society has become increasingly concerned about senior level departures in the advisory team that was acting on its behalf. "If it looks unstable at the top, that can become a cause for concern," a Halifax spokesperson said. Another said: "This is such a massive transaction that will take place over a long period. You need stable relationships."

There have been two senior departures which are thought to have led to Halifax's concern. Anthony Brook, the Warburg director who led the team on Halifax, left in December to join the rival investment bank BZW. Derek Higgs, one of Warburg's most senior executives, left earlier this year to join Prudential.

There have been expressions of concern elsewhere about the bank's approach to client relations, which are now much more product-driven, adopting SBC's American investment banking culture, rather than the relationship- style that made Warburg the envy of the City in its heyday. Halifax's decision follows the desertion of the bank by a long list of other clients, inlcuding Wessex Water, which dropped Warburg as its financial adviser ahead of its bid for South West Water this week. In addition, Boots and P&O have recently replaced Warburg as their stockbroker.

The haemorrhage of top clients is becoming a serious issue for the bank, whose corporate finance department is struggling, while the securities side is thriving on the merger. Halifax has replaced Warburg with Deutsche Morgan Grenfell as its financial adviser. Merrill Lynch, which was formerly joint broker with Warburg, has been elevated to joint broker while a second stockbroker is sought.

Warburg was saying little yesterday but did not attempt to hide its dismay at being booted off the Halifax team in such a prestigious stock market flotation. "We are clearly disappointed by this but we wish the Halifax every success in its flotation. In the meantime we are pleased to continue to work with them on other projects.

Warburg stressed that as well as the long list of client desertions, it had continued to win new business. It has been appointed by Kvaerner to advise on its pounds 900m takeover of Trafalgar House. The Swiss drugs giant Sandoz has appointed Warburg to advise on the sale of its speciality chemicals business.

Halifax stressed that the change in its advisers would have no impact on the planned timetable for its proposed conversion to bank status.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Executive - OTE £40,000

£15000 - £18000 per annum: Recruitment Genius: This is a great opportunity for...

Austen Lloyd: Law Costs HOD - Southampton

£50000 - £60000 per annum + Excellent Salary: Austen Lloyd: An outstanding new...

SThree: Recruitment Resourcer

£20000 - £21000 per annum + uncapped commission: SThree: As a graduate you are...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Day In a Page

Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

Climate change key in Syrian conflict

And it will trigger more war in future
How I outwitted the Gestapo

How I outwitted the Gestapo

My life as a Jew in wartime Berlin
The nation's favourite animal revealed

The nation's favourite animal revealed

Women like cuddly creatures whilst men like creepy-crawlies
Is this the way to get young people to vote?

Getting young people to vote

From #VOTESELFISH to Bite the Ballot
Poldark star Heida Reed: 'I don't think a single bodice gets ripped'

Poldark star Heida Reed

'I don't think a single bodice gets ripped'
The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Families clubbing together to build their own affordable accommodation

Do It Yourself approach to securing a new house

Community land trusts marking a new trend for taking the initiative away from developers
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
Tony Oursler on exploring our uneasy relationship with technology with his new show

You won't believe your eyes

Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

Moores must go. He should never have been brought back to fail again

The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn