Granada is set to come under intense pressure this week as its bid target Forte pushes ahead with plans to

Granada is set to come under intense pressure this week, as its bid target, Forte, pushes ahead with plans to sell off its restaurant business to Whitbread, the food and drink giant, for nearly pounds 1bn. The sale, which insiders at Forte yesterday confirmed could come within two weeks, has emerged as the key plank in Forte's controversial defence against Granada's unwanted pounds 3.3bn bid. A deal with Whitbread could complicate the Forte bid situation dramatically. The sale of Gartmore, almost certainly to a foreign house, is to be completed in the New Year and will not be the last.The year 1995 in the City has marked by foreign invasion. But at least the surge of inward investment confirmed London's position as the world's most international financial centre, and the undisputed financial capital of Europe. For all the traumas, as the year closed, the City appeared to be thriving as rarely before..

Perhaps, if the Lloyd's of London cloud of uncertainty hanging over the insurance sector is lifted by a settlement in the spring, then one of the giant Continental insurers, like Allianz or Axa, will finally make the long- expected move, setting the acquisition train rolling.Even the Japanese are back, darkening the doors of City merchant banks with questions about picking up fund management businesses. Norwich Union, in the insurance sector, appears headed in a similar direction.The composites, led by Sun Alliance and Commercial Union, are also eyeing each other, but too many big egos are blocking the merger pathway. Alliance & Leicester and Woolwich are expected in the New Year to abandon mutuality, converting to bank status in order to prepare for growth, while Prudential, is to move into banking. Abbey National's hostile grapple for National & Provincial left all building societies, for so long cosseted in a world of tradition and mutuality, feeling vulnerable. It has been the year of the all-singing, all dancing financial services conglomerate This has not just been in investment banking. In the retail sector, too, businesses have been merging across traditional boundaries, looking for size, clients and distribution, and the ability to offer products spanning banking, investment, pensions and insurance.Lloyds Bank's takeover first of Cheltenham & Gloucester building society and then TSB bank was the sharpest pointer to the shape of things to come. The securities side, which is what SBC was really after, is thriving.

But corporate finance, once the envy of City, is struggling, with morale in tatters amidst clashing cultures. One of the UK's finest franchises will look much poorer by the middle of 1996, as product takes precedence over relationships.Warburg had tried, with insufficient resources, to take on the Wall Street behemoths, and failed. A sharp appreciation of this same dilemma prompted Kleinwort Benson to agree to being taken over by Dresdner Bank, Germany's second largest, and Smith New Court to vanish into Merrill Lynch of the US.This leaves a heavy question mark over the remaining City independents, like Schroders, Flemings and Rothschilds. They have received plenty of expressions of interest, not least from NatWest Group, which is keen to build up its corporate finance and fund management clout, but which has missed out spectacularly on all the main deals so far.But the sizeable family stakes give these remaining merchant banks a strong defence, and they may well thrive as focused and nimble international players among the giants, as long as they keep their hubris - and costs - under control.Unlike Big Bang One, this has not been a top-down regulator's revolution, but rather one driven by the pressure of the street.