Close Bros says markets tough after mixed quarter

LONDON (Reuters) - Merchant bank Close Brothers (CBRO.L) said markets remained difficult after a mixed three months when bad debts rose and fees edged down while the securities business was stronger.

Both the loan book in the banking division and funds under management had stayed broadly flat since January at 2.32 billion pounds and 6.8 billion pounds respectively, the bank said in a trading update on Thursday.

Fees as a percentage of managed funds continued to come off as the product mix changed.

"We continue to face difficult conditions in the asset management and banking divisions but are confident that overall, we will continue to deliver a satisfactory performance in the current markets," Close Brothers said.

The shares were 2.3 percent lower at 625 pence shortly after opening, underperforming a 1.3 percent weaker Dow Jones Stoxx European banking index .SX7P.

This week's sale of Close's corporate finance business will generate a gain on disposal of about 8 million pounds, the bank said.

The unit posted an adjusted operating loss of 2.9 million pounds in the six months to the end of January, and Close will focus on banking, asset management and securities after the sale to Daiwa Securities SMBC (8601.T).

(Reporting by Olesya Dmitracova; Editing by Hans Peters)