HL Deb 28 June 1988 vol 498 cc1291-2

2.50 p.m

Lord Bruce-Gardyne asked Her Majesty's Government:

Whether they will make a further statement on the progress of the application by Daiwa and Nomura to act as gilt-edged market-makers.

Lord Beaverbrook

My Lords, I have nothing to add to the Answer I gave to my noble friend on 25th May.

Lord Bruce-Gardyne

My Lords, I am grateful to my noble friend for that Answer although it does not carry the matter much further. Is it the intention of Her Majesty's Government that the applications from Daiwa and Nomura should be left pending unless and until additional seats are provided on the Tokyo Stock Exchange for British finance houses? If so, are we sure that the exclusion of such major Japanese players for an indeterminate length of time is compatible with our ambition to turn London into one of the three world pivotal financial markets? In other words, do we not need them rather more than they need us?

Lord Beaverbrook

My Lords, as my noble friend will know, the Japanese markets are a good deal more open to foreigners than they were. We greatly value our relationship with the Japanese, but we still look to them to eliminate sources of friction by offering the same access to their markets as we offer to ours. The matter is still under consideration, and I am afraid that there is little more that I can say to my noble friend.

Lord Bruce of Donington

My Lords, is it not the case that the Treasury is insisting—many may think quite properly—on the validity of the doctrine of reciprocity? That being the case, will the noble Lord communicate these noble sentiments to his colleagues in the Department of Trade and Industry who do not appear to adopt the same principles when it comes to predators taking over British companies?

Lord Beaverbrook

My Lords, the noble Lord, Lord Bruce, will know that British financial markets thrive on the open door that we offer to all qualified foreign houses. As regards the noble Lord's comment about the policy of the Department of Trade and Industry, I point out that often there are factors which must be taken into account. I suspect that the noble Lord has in mind the Rowntree affair. In that instance the Swiss Government did not make any policy as regards closing their doors. Many companies in Switzerland have articles of association which prevent foreign take-overs, as do many British companies.

Lord Bruce-Gardyne

My Lords, I should like to press my noble friend on one further aspect of reciprocity. How do we reconcile within the Treasury our insistence on reciprocity access as regards our London financial market while at the same time apparently objecting implacably to any suggestion of European Community rules on reciprocity of access to financial markets, and also saying that we believe in the development of a single European market?

Lord Beaverbrook

My Lords, my noble friend will be aware that the powers of reciprocity given to the Government under the Financial Services Act are reserve powers. They are quite unlike the powers which the Commission is recommending in the draft second banking co-ordination directive. The UK and other member states see no need for powers of that kind at Community level.

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