The bank has put in place special arrangements with State Street Bank and Trust Company, one of the world's leading providers of custody services, to take on the business and is recommending that its existing customers transfer their business there. Lloyds is one of the UK's largest providers of custody services, with 430 customers and pounds 140bn of assets under management.
Explaining the decision, Ken Farquhar, the managing director of Lloyds TSB Security Services, said yesterday that the because of the large amounts of investment required to say ahead of the competition, the business is increasingly one for the bigger players.
"One of the group's chosen aims is to be a leader in its chosen business," said Mr Farquhar. "Lloyds TSB is a relatively small player in the global custody business, whereas State Street has $5,300bn (pounds 3,350bn) of assets under custody. Size is important in this business to cover the substantial ongoing investment needed in systems development."
In recent years Barclays, NatWest, Royal Bank of Scotland and Bank of Scotland have all withdrawn from the custody business, leaving only HSBC among leading UK banks with a sizeable operation in the field.
Lloyds said yesterday that there would be no compulsory redundancies as part of yesterday's move. However Unifi, the banking union, said many of the staff were highly specialised and would not easily be re-employed elsewhere.
John Townsend, the union negotiator, said: "We are upset at the loss of jobs. But we accept that unlike other areas of the bank where staff are going while profits are growing, this has been an area which has not been particularly successful. Both ourselves and the bank are realistic enough to accept that it is going to be difficult to redeploy staff."
Lloyds employs 825 permanent staff at sites in London and Chelmsford, and a further 325 contract staff.
State Street, which recently expanded its operation in Edinburgh in anticipation of taking on more business, refused to comment yesterday on whether it would be offering jobs to any of the existing Lloyds staff.
Lloyds refused to disclose the terms of its agreement with State Street, although the bank insisted that the financial effects were not expected to be "significant" in the context of the group.
Lloyds TSB reports its half-year results on Friday.Reuse content