The Daily Telegraph reports that majority British government-owned Royal Bank of Scotland (RBS) has been accused of 'blackmailing' some of its UK clients by making the provision of credit to large corporates conditional on them signing up to use the bank on future lucrative M&A and underwriting deals - a practice that is illegal in the US, but fine in Europe.

According to the newspaper, RBS is forcing clients to sign a 'side letter' when credit facilities are agreed, which requires them to include the bank in future investment banking transactions. One unnamed CEO of a FTSE 250 company is quoted, saying: 'They have us over a barrel. What can we do right now ? Nothing. They are in everyone's facility. No one will be able to escape. But wait two years, when the lending market recovers, and we will never do business with RBS again'.

This issue was first flagged up by The Independent newspaper a couple of months back, which claimed that City bankers had accused RBS of 'using its relative strength in debt and corporate lending markets to force companies to allow it to take part in the money spinning underwriting process'. The newspaper quoted one unnamed banker who described the practice as 'anti-competitive'.

In the meantime, UK Prime Minister Gordon Brown has apparently vowed that he will introduce tough conditions on banker bonus pay, and says that legislation will be introduced that will 'ban the old bonus systems'. Brown believes that banker bashing will be a vote winner, and help him get elected when he faces the electorate next year. Yeah, right.

The Prime Minister has also vowed to cut the UK deficit by 50% within 4 years (like he vowed financial stability and the end of boom and bust). Bloomberg quotes Shadow Chancellor George Osborne, who said: 'The idea that Gordon Brown can reinvent himself as the guardian of the nation's finances after doubling the national debt and spending the whole year opposing anyone who said that borrowing was getting out of control, is the latest attempt to treat the public like fools'.

The Financial Times reports that Goldman Sachs 'has launched an aggressive recruitment drive' to build up its asset management unit, and is planning to hire 200 staff around the world to help beef up the business. The newspaper quotes Marc Spiker, a co-head of the division, who confirmed that the firm was 'moving back on the offensive' in asset management.

And CBS News' 60 Minutes program has reported that Bernie Madoff trustee Irving Picard is planning to sue Bernie's two sons, his brother and his niece, seeking the return of $198m, and claiming that they were in breach of their fiduciary duty and negligent in their duties.

Finally, The New York Daily News reports that Bruce Sherman, who owned 5.9% of Bear Stearns at the time of its 'sale' to JPMorgan Chase, is suing the firm's former top executives and auditor Deloitte & Touche, claiming that they overstated the value of the company's stock. Sherman says that he was encouraged to acquire a large stock holding in the firm by representations made to him by the execs and the auditor. He is suing for unspecified damages.

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