Jefferies on brink of RBS broker deal

US INVESTMENT bank Jefferies could close a deal for legendary stockbroker Hoare Govett as soon as today as its owner Royal Bank of Scotland continues to cut the size of its balance sheet.

Jefferies is expected to pay only a nominal sum for Hoare Govett, whose staff had feared the business would be closed amid the City deals drought, government demands for RBS to be shrunk and the fall-out from the Eurozone crisis.

The Americans could hire about 60 Hoare Govett staff, City A.M. understands.

Oriel Securities and Liberum had been interested in parts of the corporate broking business while Numis, broker ICAP and Canadian bank RBC Royal were also linked to a bid.

RBS acquired Hoare Govett as part of its controversial takeover of ABN Amro in 2007. The Scottish bank, now 83 per cent taxpayer-owned, allowed the broker to retain its own identity because of its long City heritage.

Hoare Govett has held mandates with a host of FTSE-listed firms including BAE Systems, GlaxoSmithKline and Tullow Oil and also advised security group G4S on its plan – later scrapped – for a £5.2bn merger with catering giant ISS.

Jefferies will pay only a nominal amount to buy Hoare Govett and RBS has offered to provide funds to cover some staff costs, according to reports. The two banks declined to comment.

RBS said earlier this month it was selling or closing its unprofitable cash equities, merger and acquisition advisory and equity capital markets businesses and shrinking in other areas, potentially cutting up to 3,500 investment banking staff.

Since joining RBS as chief executive in 2008 Stephen Hester has shrunk the balance sheet by about £600bn.