If the London Stock Exchange is for sale, why not the Bank of England?

The London Stock Exchange is now the object of a bidding battle, with Nasdaq, a New York stock exchange, making an unsolicited bid into a final offer, and all sorts of speculative financiers buying their shares.  This is all very exciting for the City, but is it good for Britain?

There are a lot of people who would say “no”, if they had a voice.  If Sky television held one of its audience polls, I guess that the public would want the L.S.E. to stay British by 80 to 20 per cent, or more.  If this was the Moscow Stock Exchange, President Putin would forbid it to be taken out of Russian control.  Are the British right to allow an institution of this kind, which inevitably has regulatory functions, to be bought by anyone who has the cash?

The second largest investor in the L.S.E, who has paid significantly more than Nasdaq’s bid price for his shares, is Samuel Heyman, known in the 1980s for working with Michael Milken, the junk bond king.  I happen to think that Milken was a good influence on U.S. finance, but he was certainly a speculator.  Should the future of the L.S.E. be determined by speculators, who have short term objectives?  Or should a central regulatory market be protected against speculative attack?

I know the City answer.  The L.S.E. should be subject to the normal competition of free markets.  Indeed it is itself a symbol of free markets.  The sale of the L.S.E. may allow the building of a global stock exchange of the future in which Mr. Heyman will have little part.  He is merely an intermediary, concerned to take a profit if L.S.E. is going cheaply.  Maybe that is the correct view.  But I would like to see it debated.  If Mr. Heyman went to the Treasury and made a bid for the Bank of England, I think he would be turned down. If the Bank is sacrosanct why not the Stock Exchange?

Comments

[stephen francis]

Of coure it shouldn't be sold, and certainly not to an American company. If it is sold to an American company, it will be regulated by American laws rather than UK laws, which have made it more competitive than US institutions. If the LSE becomes uncompetitive, the whole of the UK economy will suffer, because the City is the only thing that is actually earning anything in the UK.

[Ian Thorpe]

Well Fuhrer Blair's favourite management consultancy McKinsey have a motto "if it can be measured it can be managed" (showing they don't really understand the verb infibitive "to manage," I guess in the Treasury's mind this translates to "if it can be valued it can be sold."

Why not sell the Bank, The Church of England, Snowdonia, Windsor Castle (think how Disney could improve that by adding proper turrets) and anything else that will fetch a few quid.

[Roger Hope]

No.It is yet another example of the passivity exhibited by this government, which encourages foreign private equity groups to voraciously consume British companies .
Yes, I am aware of the extent to which Britain has historically invested in overseas businesses-but New Labour is presiding over a wholesale sell-off of the UK's productive heart without demur.
Why is the traffic so unidirectional? Why didn't BAA buy Ferrovial? What prevents the LSE from snapping up the NASDAQ?
Why aren't the French buying power and water from British utilities?

[Chris Sherwood]

Anyone reading this piece and the comments following it would be forgiven for thinking they were looking at translations of a discussion in France or Italy between arch-protectionist, national champion-loving, old-style dirigiste elites! The LSE is a company like any other, and can be bought and sold, and can buy and sell, just like any other. If it really has to be considered an essential national asset, it should be nationalised. You can't have it both ways - both protectionist and free-market!

[Philippa Pirie]

The Bank of England was founded in 1694 and in private hands. It has only been nationalised since 1946. I have never understood why Blair allows Brown to take the credit for 'freeing the Bank of England' from political control, when Blair could go down in history as the man who privatised it.

[Brian Carrier]

We appear to be only too ready to sell off the jewels in the industrial crown of the UK ,ie The Utilities, (gas,water ,electric,)BAA and the like, now the LSE is put up for grabs.
What I cannot understand is if we are selling this presuposes that the oposition must be available, Why cannot we buy them.
Or could it be that the oppositions government recognise that they are in fact jewels in their crowns and prohibit the sale of these assests to foreigners.

[Michael Boyd-Carpenter]

I was a Member & therefore a proprietor of the S.E. from 1956 until the 90's when we were fobbed off with £10000 payable on our 60th birthday after the Council sold out.
Since then I have carried out voluntary service advising Financial Institutions in the former Eastern Block & in N. Africa.I found that when I asked for assistance from the London S.E. they were completely useless whereas Euronext could not have been more helpful.It appears to me that the S.E has muddled along in the last few years thus becoming a target for a takeover.
Of course it should not be bought out by a bunch of chancers.It is a national institution.

[Winchester whisperer]

What does it matter if the LSE is bought? The investment banks want to set up their own exchange. Physical stock exchanges are things of the past. A large % of the market cap of the FTSE 100 has business outside the UK. There should be one global, virtual exchange.

[Flavian Bergström]

If gold convertibility of the Pound Sterling were restored - for example at a rate of £100 per sovereign - and the issuance of notes were given free, and Bank of England notes lost their legal tender status, certainly the Bank of England could be privatized.