Lloyds TSB, the UK’s third largest bank, is to shut its offshore investment and fund management arm in the Bahamas after concluding it is too small to compete.
The bank plans to phase the closure of its Nassau-based offshore operation over the next few months as it transfers clients.
Lloyds TSB will move the trust business to its existing operations in the Channel Islands. Private banking operations will be transferred to the bank’s operations in Miami, Panama or Geneva.
Lloyds TSB has international wealth management operations in 17 countries including Dubai, Hong Kong and Singapore. The number of jobs affected by the decision to pull out of the Bahamas is thought to be small.
The move comes months after Northern Rock, the UK mortgage bank, also closed its Bahamas operations blaming difficulties in attracting US investors.
Northern Rock found it tough to attract dollar-based savings into its Bahamas operation because it was not allowed to advertise its products in the US.
The Newcastle-based bank set up the Bahamas operation in 2000 as a back-up facility amid fears that its existing Guernsey offshore bank could be forced to move by the imposition of a withholding tax. However Northern Rock told investors last year that it did not plan any further moves overseas.
A third UK bank is also considering pulling out of its offshore operations.
Abbey National is reviewing the future of its international operations as part of a restructuring.
It plans to focus on UK personal financial services and is to hive off its non-core operations into a portfolio that will be sold off or run down.
As part of its wide-ranging review, Abbey National is looking at the future of all international operations as well as its mortgage businesses in France and Italy .
By Jane Croft, Retail Banking Correspondent
