Singer sells brokerages before bubble bursts

Independent merchant bank Singer & Friedlander plans to sell off its stockbroking outfits before the share bubble bursts.

The bank, which has been cited as a takeover target for its rival Close Brothers, is expected to use the proceeds of the sales of Collins Stewart in the UK and Carnegie in Scandinavia to boost its fund management operation.

Michael Gibbins, chief operating officer, said yesterday the bank was in the advanced stages of talks with the management of Collins Stewart after they made an approach to buy the company back after 10 years.

He refused to disclose the price although analysts suggested it might raise £100m for the bank.

The move by the management of Collins Stewart had prompted Singer & Friedlander to review its 55% stake in Carnegie although it was unclear last night whether the group was planning to sell out its shares entirely. Reporting a 50% rise in pre-tax profits to £81.8m, the bank admitted the two broking businesses accounted for £63.4m of the overall figure, generated by the explosion in the demand for share trading.

In part, the decision to sell was motivated by a need to improve its stock market rating which was held back by the volatility of returns in the broking businesses.

In its core merchant banking business, Singer & Friedlander had boosted its fees from clients by taking stock options.

Mr Gibbins used an arrangement struck with Affinity, floated on the stock market last year, in which it owns stock options worth £25m, in addition to £6m already realised, as an illustration of the new payment method.

Singer & Friedlander is to pay a 7.2p dividend. The shares hit a year high of 248p before falling to 240p, up 5.5p.