Fresh hope has emerged of a buyer for one of the City of London’s oldest stockbrokers, after Oriel Securities entered talks on a takeover of Hoare Govett.

The preliminary discussions, which began this week, could result in Oriel becoming partners with Hoare Govett’s management to buy its brand and assets from Royal Bank of Scotland. Hoare Govett has been battling to retain market share in the broking sector. It lost GlaxoSmithKline, one of its few remaining FTSE 100 corporate broking clients, to Citigroup shortly before Christmas.

The management at Oriel, which was founded in 2002, has ambitions of making it a leading British independent stockbroker. It coped better than many peers with a tough year for the sector in 2011, and increased its headcount by 30 per cent as other securities businesses shed large numbers of staff or closed their doors.

Simon Bragg, Oriel’s chief executive, formerly worked at Hoare Govett, while Peter Meinertzhagen, a director at Oriel, was one of the City’s most influential figures during 17 years as chairman of Hoare Govett.

Mr Meinertzhagen is widely credited with building up Hoare Govett’s once-impressive roster of corporate clients.

However, the broker no longer retains the clout of its heyday in the 1990s. The defection of GlaxoSmith-Kline has left it with only eight corporate clients in the FTSE 100, including Morrison, Rolls-Royce and Tullow Oil.

Analysts said that RBS might accept a nominal price for Hoare Govett, which it acquired as part of its 2007 takeover of ABN Amro, to avoid the cost of making its staff redundant. However, it may need to award generous packages to staff important to the Hoare Govett brand, in order to keep them in place during negotiations.

The bank, 83 per cent of which is owned by the state, is set to shed up to 10,000 workers as it carries out a large-scale reduction in the size of its investment banking division. On Friday, it announced the appointment of Richard Kibble, a partner at PwC, as its head of strategy to assist the turnround.

The cuts are expected to account for much of RBS’s equities operation, which employs 150 people. Many of the 30 staff in its corporate broking division, the traditional core of Hoare Govett, would be likely to move to Oriel if any deal went ahead.

As a relatively new entrant to the City, Oriel would also benefit from the prestige of a brand that can trace its origins back to 1856.

However, analysts said that it remained unclear which assets would be included in a sale of Hoare Govett, which has been integrated into RBS’s investment banking division.

It is not known, for example, whether any property assets are registered to the broking subsidiary.

Meanwhile, some commentators have questioned the future of the City’s smaller broking houses. The business model has been undermined by low levels of capital raising, and by pressure on broking commission fees.

Last year, Investec agreed to buy Evolution Group for £233m, a price that was seen to place little value on Evolution’s securities arm. That was followed by Collins Stewart Hawkpoint’s acceptance of a £253.5m offer from Canaccord, the Canadian bank.

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