Close seeks new chief as profits fall

Colin Keogh, who joined Close 23 years ago and has been chief executive for the past six, will step down as soon as a replacement has been found. Head hunters have been appointed to search for candidates. Financial director Jonathan Howell, who had been touted as a potential replacement, has already ruled himself out.

The news comes as the group announced full year profits had slumped 32 per cent and warned the tough market conditions would continue to affect performance this year.

Strone Macpherson, Close's chairman, said Mr Keogh had lead the group with a "steady hand" but added: "Looking ahead, banks and financial services companies are facing very different conditions and the board has decided that, as part of an orderly succession plan, this is the time to change the leadership."

Mr Keogh, 55, yesterday called his time in charge at Close Brothers "exciting and challenging" adding: "Now is a good time to commence the search for a successor to take the group forward in what will be a new era for banking."

In the past 12 months, Close has held a series of negotiations with rivals looking to buy the group, but none have come to fruition. Fractious talks with rival Cenkos Securities, who offered £1.5bn, collapsed earlier this year, as did negotiations with India's Tata, US private equity group Blackstone and Orix in Japan.

Numis analysts suggested Mr Keogh might have paid the price. They said: "We believe that a significant minority of shareholders have not forgiven him for rejecting the various bid approaches earlier this year for as high as 1025p."

The charged was hotly denied by insiders yesterday, who added the bids had never been more than indicative and were "pretty flaky".

Under Mr Keogh's guidance profits, earnings and assets have broadly doubled, according to the group. Yesterday, it announced pre-tax profits of £127.5m in the 12 months to the end of July. This marks a drop of almost a third from £190.2m last year, but Mr Keogh called the performance "resilient" following a year "as eventful and challenging as any" in the group's history.

Robin Savage, analyst at Keefe, Bruyette & Woods, said that while the results for all divisions were weaker than expected, the numbers were "broadly acceptable".