Cazenove fears over WH Smith

THE Queen's stockbroker, Cazenove, already reeling from a spate of client defections, faces the loss of yet another blue-chip customer this week.

WH Smith, led by chief executive Kate Swann, has put the role of corporate broker out to tender, leaving incumbents Cazenove and Hoare Govett to fight off a challenge from City banks believed to include Deutsche Bank and Credit Suisse, who are both keen to expand their broking businesses.

WH Smith said it was 'normal for any business to review relationships'. Both Cazenove and Hoare Govett might hang on to the business. But the loss of WH Smith as a client would be the latest in a series of defections from Cazenove since it agreed a joint venture with American banking goliath JP Morgan.

Hoare Govett has also lost several high-profile staff in a defection to Citigroup led by chief executive Nigel Mills. These moves are already believed to have led to the loss of Cadbury Schweppes as a client.

Caz, as it is known in the Square Mile, once boasted that more than half the companies in the FTSE 100 were its clients. But in the last year it has lost drinks giant Diageo, broadcaster ITV and HBoS bank.

Fears that Cazenove's independence would be compromised were fuelled when JP Morgan backed American tycoon Malcolm Glazer's takeover of Manchester United.

Cazenove was United's broker and adviser, but it and JP Morgan denied a conflict of interest.

Sir Roy Gardner, chairman of Manchester United, criticised Cazenove and JP Morgan over the deal. There has been speculation that Cazenove's role as a broker for energy giant Centrica, where Gardner is chief executive, may be reviewed.

Cazenove, whose affluent personal clients also include David Beckham, changed from a partnership to a company in 2003 with plans to float on the stock market.

But the float never came to fruition as the firm's business suffered from the slump in share dealing and in mergers and acquisitions, which are crucial to Cazenove's fortunes.