The City stockbroker controlled by Bob Diamond, the former Barclays chief, is plotting a merger with one of its listed rivals as a slowdown in corporate activity drives a search for bigger cost savings.
Sky News has learnt that Panmure Gordon, in which Mr Diamond’s Atlas Merchant Capital took a majority stake in 2017, has approached FinnCap Group about a potential tie-up.
Discussions between the two companies are said to be at an early stage, and there was no certainty on Monday evening that they would result in a deal.
A merger of Panmure and FinnCap would bring together two of the best-known players in the area of the London stockbroking industry that focuses on advising small and mid-cap companies.
FinnCap has endured a difficult period, losing Sam Smith, its prominent chief executive and one of relatively few female City bosses, during the summer.
Its shares have slumped by nearly two-thirds during the last year.
At Monday’s closing share price of 13.5p, it had a market capitalisation of just £24m.
Panmure itself also used to be listed on the London stock market, and it was unclear whether a deal would see it launch a reverse takeover of FinnCap that would see it return to being a listed company.
Mr Diamond’s move to take control of Panmure in 2017 came five years after he stepped down as Barclays chief executive just days after it was fined for manipulating the Libor interbank rate.
Since then, he has parachuted in Rich Ricci, a former Barclays colleague, as Panmure’s chief executive.
Its other shareholders include a vehicle backed by the Qatari royal family.
Panmure reported in May that it had turned a profit for the first time since Mr Diamond took control.
A dearth of initial public offerings and takeover activity in the City this year have forced investment banks to begin cutting their cost-bases.
At the weekend, it was reported that FinnCap was making 10 of its 150-strong workforce redundant, while The Sunday Times said that Numis, Peel Hunt and Zeus Capital were also trimming jobs.
Other broking firms are also expected to participate in industry consolidation, including WH Ireland, which is under siege from an activist shareholder.
Atlas Merchant Capital and FinnCap both declined to comment.