Investors should probe fees - Myners
LONDON (Reuters) - Big shareholders should hold their own public inquiry into investment-banking fees, which show some features of a "semi-oligopolistic market," British Financial Services Secretary Paul Myners said Thursday.
The new call by Myners, a former fund manager, adds to growing pressure for lower fees on services such as share and bond sales and merger advice. The fees have also roused watchdogs and investor bodies such as the Association of British Insurers (ABI).
"There is a real opportunity for shareholders to show that they are acting on behalf of their clients and launch a public inquiry," Myners told reporters on the sidelines of a corporate-governance conference in London.
Myners said he had "very real doubts" institutional investors would stage such an inquiry but he would "delighted" if they did.
"Investors do have teeth -- this is the extraordinary thing about it. They both own the business on behalf of their clients and they also generate huge amounts of revenues for the investment banks," he said.
Last week Myners said banks should not be allowed to continue earning very high margins after "gouging" customers for years.
Soon afterwards, the Office of Fair Trading (OFT) said it was "keen to find out more about competition in investment banking fees." Meanwhile the ABI, one of Britain's most influential investor groups, wrote to Business Secretary Peter Mandelson, decrying "enormous" adviser fees as a "deadweight cost" that can erode merger synergies.
Prudential is set to pay fees of as much as $735 million (490 million pounds) for its $21 billion rights issue, sources familiar with the matter said earlier this month.
The fees for the share sale, to back Prudential's purchase of AIG's Asian life-insurance arm in the year's biggest takeover, equate to as much as 3.5 percent.
(Visit Reuters DealZone: here)
(Reporting by Raji Menon, writing by Quentin Webb, editing by Will Waterman)
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