By the time you read this, the three-day auction phase of the Canary Wharf battle will be over.
The absolute deadline for revised bids was last Friday (16 April), and this week we might even know whether Brascan or Morgan Stanley has won out. On second thoughts, it’s a week late for an Easter miracle and the battle for Maggie Thatcher’s legacy will no doubt drag on until next month.
Still, it’s a good time to examine one story that never made the light of day. It’s an old chestnut, but this controversial bid demonstrates yet again how reluctant City litigators are to irritate the banks. On 23 December last year, the Wharf’s shareholders voted through the sell-off of around £1.1bn worth of property to the Royal Bank of Scotland (RBS).
As Wharf-watchers will know, the Brascan consortium tried to stop the sale, on which Morgan Stanley’s bid was conditional. Less well-known is that Brascan unsuccessfully asked a range of City firms to advise on how to stop the sale.
Brascan didn’t necessarily want to sue or injunct – just a bit of preliminary advisory work. According to one litigator, however, “no law firm that had the experience would touch it”. Slaughters and Freshfields, once blackballed by Merrill Lynch and Citibank respectively, will testify that suing investment banks is a definite no-go.
Now it seems you can’t sue UK retail banks either. In fact, the influence of RBS and co is much greater. The investment banks have four or five firms in with a shout for their premium work, but every man and his dog is on RBS’s panel.
Brascan’s lead adviser Freshfields could certainly not afford to hack-off RBS, with which it has been rebuilding its relationship. Neither, probably, could Herbert Smith or Macfarlanes, which also advise Brascan consortium members.
Canary Wharf is so big that many firms have real, rather than commercial, conflicts. However, Brascan turned to others uninvolved and further down the food chain, but still got nowhere. Perhaps the reason is that RBS (which declined to comment) has dozens of firms on its wide-ranging panels. If you sign up, you’re not supposed to act against the bank, full stop. That’s pretty handy for RBS.
Ultimately, it seems Brascan went straight to the bar. Barristers like to boast that they can take such instructions without fear or favour and would love to muscle in on lucrative contentious M&A work. The question is: can City litigators stand up to their corporate and finance partners, or will their future wear a wig?