Britain's competition regulator, the Office of Fair Trading, has announced that it would open an investigation into the performance of investment banks in underwriting corporate fundraising.

The OFT said it would investigate the equity underwriting market, where firms try to raise funds by selling new shares. The investigation will focus on the level of competition and how the process of shares' sale is carried out.

Making the announcement, a spokesman for the OFT said, "We can confirm that the OFT will tomorrow be launching the early stages of a market study into equity underwriting."

Last year, companies raised seventy billion pounds via sale of new shares and paid two billion pounds in underwriting fee.

The Association of British Insurers are among the big investors who complained that banks are charging up to 4 per cent in underwriting fee, well above 2 per cent, historically charged by bankers.

Royal Bank of Scotland, Citigroup, Barclays, Goldman Sachs and Morgan Stanley are the major underwriters in Britain.