Hoare Govett, the City stockbroker owned by Royal Bank of Scotland, is expected to face fresh turmoil this week when the head of its key smaller companies research unit quits.
It's believed that Richard Rae, a long-serving employee, is leaving the broker and could take his 20-strong team with him. City sources suggest that Mr Rae is quitting over concerns about the direction of the stockbroker under the largely state-owned RBS.
"There remains a fear that government ownership means an end to decent bonuses, irrespective of performance," said the source. "Clearly some people don't want to take the risk."
The defection will come as a blow for Hoare Govett, which has suffered a period of unprecedented upheaval in the two years since it was acquired by RBS as part of its giant £49bn purchase of ABN Amro. In February, a measure of certainty was restored after RBS's global banking chief, John Hourican, said Hoare Govett remained an "integral part" of its strategy, following reports of a sale. Paul Nicholls, who took over as Hoare Govett's chief executive in 2006, said recently: "For the first time since I joined the company, the uncertainty is not there."
An spokesman for RBS was unavailable for comment.