Lloyds TSB has appointed Lehman Brothers, the US investment bank, as its joint corporate broker, ending a hotly contested battle for the opportunity to act as an adviser to Britain’s fifth-largest bank.

The move follows a decision by Lloyds to review ABN Amro Hoare Govett’s position as corporate broker after a team of executives defected to Citigroup. Lehman will work alongside Citigroup, which was already acting as joint corporate broker to Lloyds and whose position was not under review.

Lloyds is the latest large company in the FTSE 100 to switch brokers, following an unprecedented period of change in what have traditionally been some of the most enduring advisory relationships in the City of London.

The appointment is a coup for Lehman, which like other banks has been attempting to expand its corporate broking business but had not had a client in the FTSE100 since the takeover of Abbey National in 2004.

Lehman was selected after a beauty contest which included pitches from other investment banks including JPMorgan Cazenove, UBS and Merrill Lynch.

The mandate is seen as particularly attractive because Lloyds, which has faced questions about its future growth, has long been rumoured as possible takeover target for a foreign bank. Corporate brokers are particularly important in takeover battles because they act as an intermediary between the company and its shareholders.

However, Lloyds executives are also keen to persuade investors that the overhaul of its retail banking operations and the expansion of its wholesale banking division is paying off. This could pave the way for Lloyds to consider more expansionary moves in the future.

Lehman is thought to have stressed the growing strength of its UK equities business, which handles an increasing proportion of the volume of shares traded on the London Stock Exchange.

Investors have been waiting to see whether the arrival of Sir Victor Blank as Lloyds chairman will have any impact on the bank’s strategy. However, people familiar with the process said the decision to review the bank’s broking relationships preceded Sir Victor’s arrival.

Shares in Lloyds TSB rose 1.27 per cent in morning trade on Wednesday to 517 ½p.

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