The closure will be the first by a Wall Street firm and will result in 1,200 job losses.

Lehman Brothers has confirmed there are no plans to change its strategy for sub-prime in its UK operations.

Jennifer Weller, head of communications at Lehman Brothers capital division, Europe, said: “We have said that we very much intend to continue to invest in our European business – we have a new facility opening in the Netherlands in September, new technology for the UK at the end of the year, and we are looking at new opportunities for new markets.

“It is a different situation in the US than it is here, and this is our way going forward. The main point for us is that this is a challenging time, but we are continuing to invest in Europe.”