Salomon Smith Barney could hardly have hoped for a better start to its nascent corporate broking business.

Just months after officially launching a corporate broking business and less than a week after Atholl Turrell joined the firm as head of the business, Salomon has snapped up Lloyds TSB, the darling of the UK banking sector, as its first client. Salomon will work alongside Hoare Govett, Lloyds' existing broker in the UK, with an initial brief to handle Lloyds' forthcoming ADR issue on the New York Stock Exchange. Lloyds TSB is actually Salomon's second corporate broking client, but the first since it officially launched into the business. In April last year Bowthorpe, the £2.3bn (E3.7bn) technology and electronics company, appointed Salomon as broker after it handled the firm's ADR listing in New York. Salomon is beginning to carve out a niche for itself in corporate broking for UK firms on US transactions. In November the firm handled the listing on the New York Stock Exchange for Smith & Nephew, the UK medical equipment company with a market capitalisation of £2.2bn. S&N turned to Salomon for its US connections ahead of Cazenove and Dresdner Kleinwort Benson, its established corporate brokers in the UK market. In addition, Salomon is advising National Power on its proposed demerger, which will lead to a listing of its international division on the NYSE. The company usually uses Cazenove and HSBC.The appointment by Lloyds TSB sends a warning shot across the traditionally cosy world of UK corporate broking, which is dominated by the descendants of the old school UK stockbrokers. Some of these may struggle to keep up with the pace of globalisation. Kent Atkinson, finance director at Lloyds TSB, said: "Salomon has been working with us informally in developing our relationships with US institutions for some time now. We wanted to formalise these relationships and Salomon has a very strong US franchise. In addition, it has some good people in Europe and is building up its team here.' He stressed that Lloyds was very happy with Hoare Govett's service, but decided it needed to add a firm with a more entrenched position in the US market. Jim O'Donnell, head of European equities at Salomon, is candid about the firm's strategy. "We know we are behind in Europe and need to focus on building our strength here. Our aim is to leverage off the strength of our core US franchise as our entrée into this business,' he said. The firm has more than 11,000 retail salesmen in the US and last year was voted as having the best institutional sales desk by Reuters. Salomon's attempts to break into the tightly guarded UK corporate broking market could also be helped by its late arrival on the scene. After several years of unprecedented consolidation in investment banking, corporates are finding it increasingly difficult to find top-tier advisers who are not already working with their arch-rivals. "One of the reasons for our appointment of Salomon is that it did not have another bank on its corporate broking client list, which ensures there will be no conflicts of interest,' said Atkinson. This is especially important given the rapid pace of consolidation and shortage of advisers in the UK financial services sector. Salomon has aggressive plans for its corporate broking business. In addition to Turrell, a former director of corporate broking at Deutsche Bank, the firm already has four staff on board and is aiming for a team of 20 by the end of this year. It also has half an eye on the continental European market, which is almost virgin territory in terms of the traditional UK corporate broking product. The most recent appointment is Aine Kelly, a director in corporate broking, from Instinet. Before joining Instinet last year, Kelly worked at JP Morgan and Dresdner Kleinwort Benson. While formal corporate broking relationships do not exist in continental markets, O'Donnell believes that certain aspects of the UK relationship, especially the regular equity dialogue with the company and the investor relations function, are readily exportable.