By Mark Kleinman, City Editor
Oriel Securities, one of the most prominent names in the City's broking sector, is casting around for a merger partner amid continuing pressure on industry revenues.
Sky News understands that Oriel, which is led by Simon Bragg, its chief executive, has in recent weeks begun holding discussions about a tie-up with Panmure Gordon, another mid-cap broker, according to people familiar with the situation.
Oriel, which has a multi-million pound loan outstanding from HSBC and like other brokers has been hit hard by the weak trading environment since the financial crisis, has also been in talks with other firms said to include CIBC, the Canadian bank, about a potential deal.
The talks between Oriel and Panmure Gordon are at an exploratory stage and it is far from certain that they will progress any further, sources said on Monday.
Panmure's chairman, Ed Warner, and chief executive, Philip Wale, are understood to be on holiday at the moment, suggesting that further discussions are unlikely to take place in the coming days.
The discussions with CIBC are logical because it distributes Oriel research in North America.
A major round of consolidation has been expected in the industry for several years. Some brokers, such as Seymour Pierce, succumbed to the downturn, falling into administration and being carved up earlier this year.
Oriel has had a long-standing relationship with HSBC but is understood to pay a high coupon on its loan from the bank.
In February, the broking firm lost its chief executive when David Knox stepped down amid "strategic differences" with other executives. Mr Bragg, who holds a big chunk of Oriel's shares, took over from him.
Oriel has around 100 employees and boasted in April that it had raised more than £1bn for clients during the first quarter of the year.
Last month, the Financial Times reported that several rival brokers were in talks about combining their back office operations in an effort to save costs.
People close to Oriel said the merger talks were not being conducted from a position of weakness but that profits had recovered strongly during the first half of the year and that a tie-up was "not a must-do deal".
Oriel and Panmure declined to comment.
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