Don’t short-change the LSE By ALEX BRUMMER

SOMETIMES one despairs of attitudes in Downing Street. When it comes to overseas takeovers there is seldom a deal that it doesn’t like. Government initially backed EADS’s deal with BAE and Pfizer’s takeover of AstraZeneca. It now it looks as if it is sympathetic to Deutsche Boerse’s backdoor takeover of the London Stock Exchange. Fortunately, ministers and mandarins do not have the last word when it comes to mergers and acquisitions.

BAE has been infinitely strengthened as a result of the rejection of the Airbus owner’s deal by investment guru Neil Woodford and Angela Merkel (who feared loss of German jobs).

As for AstraZeneca, both it and GlaxoSmithKline have been reinforcing the importance of the life sciences economy to Britain.

Which brings us back to the merger of the Frankfurt and London exchanges. Everything about this deal has the look of an ill-thought out botch. The two parties say they will go ahead irrespective of Brexit but are nevertheless setting up a ‘referendum committee’ to monitor events. The holding company will be located in London but the headquarters of both the LSE and Frankfurt will continue to live in their native cities.

Then there is the share out of top jobs. Xavier Rolet, who has done a good job at the LSE, has been sidelined and the virtually invisible Donald Brydon becomes chairman with DB’s boss Carsten Kengeter as chief executive. Instead of accepting the chairman’s job, Brydon should be campaigning vigorously for a better price for shareholders.

A big question for investors in the LSE is why there is no cash on the table? And why as the LSE is established as the growth player they are not getting a premium? DB is trying to buy the LSE on the cheap and Qatar and other big shareholders should not accept that.

Finally, this is a deal that should not be allowed to be rammed through. Competition issues need to be scrutinised by the European Commission and also by the Financial Conduct Authority, which has a mandate to promote competition.

The normally hyperactive Treasury Select Committee should not be sitting on the sidelines. It has a democratic duty to examine the regulatory implications. The Commons Business Committee must look at the impact on the City of London, jobs and UK plc.

At the very least there needs to be some sand in the wheels. Better it is stopped in its tracks.

Still waiting

WHEN a reader asked me some years ago how long it would take for Royal Bank of Scotland shares to recover to anything like a pre-crisis price I suggested ten years.

The big regret now is that I didn’t say 15-20 years if ever. The damage done to what was once the most highly valued bank in the world by the ancien regime of Fred Goodwin has proved immeasurable. As is true of most of Britain’s banks, underlying businesses are doing fine. If there is a problem in retail banking, it is low interest rates which could go down before rising again. Every full percentage point rise in interest rates is worth £400m in profits.

It is in the provisions where the problems lie. There is another £600m for payment protection insurance provisions in the 2015 results as RBS and the other British banks prepare for the final rush before the drawbridge on claims falls in the first quarter of 2018.

Then there is the toxic legacy of mortgage backed securities in the US. A write-down of £2.1bn has been taken by RBS against this activity but the rub is likely to come this year when the US Justice Department delivers fines that could be in the multi-billions.

This would wipe out another hard year for chief executive Ross McEwan’s effort to bring down costs, increase mortgage lending and stabilise badly damaged Ulster Bank. And even when this nightmare is over there is still the shareholders lawsuit, which alleges a false prospectus at the time of the £12bn rights issue in 2008. The challenges of sorting all of this out while running a bank at a time of fast moving technological changes are considerable. On the IT front £760m has been spent on updating systems and dozens of bolted on bits have been eliminated. RBS is also pioneering biometric sign-on in its private bank as it seeks to occupy digital space.

The sale of Williams & Glyn will have to wait until 2017 unless a trade buyer should emerge. At the end of the rainbow sits a dividend for shareholders. But until that really comes into sight the shares will continue to tread water.

Losing odds

ONE of the great pleasures of going to the races has always been weaving among the bookies stands looking for the best starting prices.

Step by step the fun of the chase is being taken out of betting with increased automation ranging from odds comparison sites ( which squeeze the spread) to new self-service terminals to be installed at William Hill, removing human interaction from the betting shop too.

It will end with us all sitting at home watching on TV, with our smart phones in front of us, pretending this is an uplifting experience.