City regulator met Saudi Aramco before unveiling new IPO rules

Oliver Haill Sharecast | 13 Oct, 2017 10:27 | | |

The City's chief watchdog, Andrew Bailey, revealed on Friday that he met with Saudi Aramco early this year to tell the oil giant about plans to change listing rules that could allow it to float in London.

Bailey, chief executive of the Financial Conduct Authority, wrote a letter responding to queries from Nicky Morgan, the chair of parliament's Treasury Select Committee, and Rachel Reeves, chair of the Business, Energy and Industrial Strategy Committee, about the extent of government influence over the proposals to create a new category within its premium listing regime.

"As you might expect, in the normal course of the FCA's duties, we hold meetings with potential listing candidates which, given the commercial sensitivities, we do not disclose," Bailey said in the letter, which was published on Friday.

"However, given the public discussion of these events, we can confirm that we held conversations with Saudi Aramco and their advisors in light of their interest in a possible UK listing in the early part of this year. We emphasised during those conversations that we were reviewing the listing regime."

Having received his response, Morgan said: "Questions remain about the level of political involvement in the consultation.

"The UK’s world-class reputation for upholding strong corporate governance mustn’t be watered down.”

Her committee will question Bailey further at a public hearing later in October.

For her part, Reeves said: "What may well be good for city traders is not necessarily good for the rest of the country’s economy or investors.

"It is not at all clear how taking these steps will boost jobs, investment or returns to investors in the UK and I look forward to examining the FCA’s proposals once their consultation has concluded."

The FCA in July launched a consultation over its plans to create a new category within its 'premium' listing to cater for companies controlled by a shareholder that is a sovereign country, exempting companies controlled by governments from certain related party and controlling shareholder rules.

In April, Prime Minister Theresa May was joined by London Stock Exchange chief executive Xavier Rolet on a trip to Saudi Arabia as the pair looked to trumpet London's attractions amid competition from New York, Hong Kong and Tokyo for what is likely to be the world's largest ever IPO.

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