Signs of growth as Lloyds hires executives to cope with corporate demand

LLOYDS Banking Group says Scottish companies are showing more confidence in their cash management in readiness for the upturn and it is hiring two senior executives to cope with a surge in activity.

The corporate markets division, which supports businesses in Scotland with a turnover above £15 million, has seen transactions rise by almost a third and companies preserving cash for longer as they prepare for acquisitions.

With the pipeline of new business showing signs of long-term growth, the bank will appoint a customer services director – a unique position in the corporate market place in Scotland – as well as a head of Scotland specifically focused on supporting corporate customers in its business support unit.

Longer term deposits are up, as is the take-up of risk management products such as foreign exchange. Interest rate hedging also increased last year as companies aimed to control their financial exposures. The bank believes Scottish firms have confidence in their own capacity to trade through the cycle.

Alasdair Gardner, managing director of Lloyds Bank Corporate Markets in Scotland, said: “We said that ‘caution’ would be the watchword for 2011, and so it transpired. Businesses have focused on cash preservation and risk management and are biding their time and waiting for the right strategic opportunity to present itself.

“We expect to see more caution but also more confidence in 2012 – Scottish corporates have laid the foundations to ride the storm and are actively seeking ways to grow both organically and by selective mergers and acquisitions.”

Lloyds said it delivered more financial backing to the energy and food and drink sectors than any other in 2011, including support for some of Scotland’s highest profile deals. The bank supported Global Energy Group’s historic purchase of Nigg Yard as well as Baxter’s acquisition of Fray Bentos.

Gardner said: “Scotland’s corporate community has completed a process of deleveraging and is now looking for opportunities to grow, whether organically or by breaking into new markets through acquisition or overseas trading. Uncertainty in the Eurozone and the depressed state of the UK economy hasn’t helped confidence, but I think that many of our customers are looking at 2012 in a positive light.

“There are some fantastic management teams in Scotland and certain sectors are likely to perform very well.

“Nobody has a clear enough crystal ball to take anything other than cautious steps into 2012, but I think we can expect to see marginally more M&A activity next year. Many Scottish businesses have strong balance sheets and will be acquisitive in mindset as they look to diversify their products and services or buy their way into new markets.

“The oil and gas sector is still the one to watch, but other sectors taking opportunities in the current economic climate include food and drink, technology and any business with exposure to emerging markets.”