Lloyds explores stockbroking future

by Gill Montia

Story link: Lloyds explores stockbroking future

Lloyds Banking Group is reported to be in talks that could result in a joint venture with stockbroker, Execution.

The latter was founded in 2001 and describes itself as “a full-service agency broker providing clients with execution, sales, trading, research and corporate access”.

Its clients include major investing institutions, including mutual funds, pension funds, insurance companies and hedge funds.

Lloyds already holds a small stake in Execution and according to a report in The Times, the bank’s ambitions to enter the broking market are well known in the City, with the focus on the fee-earning potential of rights issues.

However, last month Lord Myners challenging the level of fees charged by investment banks for their services, and threatened government action if fees for underwriting and advice are not reviewed.

According to the Financial Services Secretary, the typical charge for underwriting a rights issue is around 3%, regardless of how deeply the fundraiser has had to discount the share price to attract investors.

Lord Myners argued that where the rights issue price is well below the current trading price of a company’s stock, the risk covered by the underwriter is substantially reduced.