Lloyds closes 13-man equities business

GOVERNMENT-backed bank Lloyds has closed the equities division of its investment-banking arm in a shift back to its core banking services.

The equity markets division, a minor part of Lloyds Bank Corporate Markets, which raises debt and equity finance for mid-sized companies, had worked on share issues such as initial public offerings for clients.

The bank said the unit’s closure on Friday was a “strategic decision” to refocus on its debt service provision.

But the unit, with just 13 employees after five years in business, lacked market share and had little new work coming in.

“Our equity markets business is modest with a small market representation,” said a spokesperson. “As part of our ongoing plans to simplify our business model, we have decided to withdraw from the equity market.”

“We are making every effort to offer redeployment opportunities to affected employees,” he added.

Joe Dickerson, a banking analyst of Banco Espirito Santo, said the equities unit was “very much a non-core business”.

Lloyds Bank Corporate Markets employs more than 5,000 staff across areas including acquisition finance and lending to private equity. It made a loss of £1.09bn in the six months to the end of June 2010, up from a £7.73bn loss in 2009.

Lloyds has faced political pressure to distance itself from riskier investment banking work and return to extending lending and risk management services to UK corporates since the fallout from the financial crisis.

In November 2009, the heads of three private stockbrokers wrote to then City minister Lord Myners to complain that taxpayer-backed banks were putting pressure on their debt service clients to use their broking services as part of their loan agreements.