Business View: What Lloyds saw when it looked in the 'Mirror'

What a curious appointment Lloyds TSB has made. Most of the coverage last week was not of Sir Victor Blank's arrival at the bank but his departure from Trinity Mirror (the press is always obsessed with itself). Many said, quite rightly, that this could signal the sale of the national titles. As Sir Victor was the architect of the Trinity-Mirror merger, he couldn't be expected to be the man who dismantled it.

But no one juxtaposed his departure with the embarrassing revelations in the City Slickers trial about how Piers Morgan - the former editor of the Daily Mirror and a confidant of Sir Victor - was able to mislead the inquiry into the scandal ordered by Sir Victor. The lawyer who headed the probe testified that if he knew then what has since come to light, Mr Morgan would not have been exonerated. Mr Morgan was given a £1.7m payoff. Some investors are now asking if Sir Victor was too generous.

Arriving as chairman of Lloyds TSB, two issues strike me. One is Sir Victor's age. He turned 63 in November and is only six months younger than his predecessor. The retirement age of executives at the bank is 60, so the 54-year-old chief executive, Eric Daniel, could reasonably be expected to carry on until 2012. Unless Sir Victor is intending only a brief stint at the helm, or Mr Daniel is eyeing pastures new, you could find both the top jobs falling vacant within a short space of time - less than perfect planning.

The other is that Sir Victor is a deal maker. He made his name (and considerable fortune) as a corporate financier, merged Trinity and Mirror and is in the final stages of breaking GUS up. Lloyds TSB needs to make some tough decisions - about its overly generous dividend, about its troublesome life assurer Scottish Widows, and about its strategy in general. It has no international presence to speak of, is vulnerable to market share attacks from HBOS and Santander and has little scope left for cost cutting. Both Citibank and Bank of America are eyeing a bridgehead into European retail banking, and it is easier to buy in the UK than on the continent. Sir Victor can either sit pretty on a vulnerable-looking, declining asset or do something about it.

Over to you, Sir Victor.

Time to give up, HSBC

Across town at HSBC, the UK's most successful bank looks as if it is failing in its latest attempt to build a meaningful investment banking franchise.

Students of City history will recall how it bought the successful stockbroker James Capel in the mad land grab for City assets ahead of Big Bang in 1986. Capel was the number one house for research but was never able to develop a decent corporate finance operation. HSBC sent a dour banker from Hong Kong, Bernard Asher, to sort it out and he found that Capel was excellent at things its clients were not prepared to pay good money for.

After banging Capel into some sort of shape, HSBC then bought Midland Bank, which had its own investment banking arm, Samuel Montagu. This was merged with Capel in the hope that one plus one would create much more than two. Unfortunately, it barely added up to one, leaving the usually unflappable HSBC chairman, Sir John Bond, tearing his hair out in frustration. After all, here was a bank with one of the finest networks in the world, bursting with wealthy (corporate and individual) clients, and no decent investment bank to do their deals for them.

So Sir John brought in one of the few genuine rainmakers in merchant banking - John Studzinski, ex of Morgan Stanley. He brought in stars from Lazards, Goldman Sachs and Morgan Stanley. But still HSBC and investment banking have not meshed.

Now Mr Studzinski is going to be special adviser to HSBC's chief executive, Stephen Green, leaving the investment side to HSBC veteran Stuart Gulliver.

May I suggest some advice from John? Give up trying to create a world-class investment bank.

j.nisse@independent.co.uk