| Type | Public limited company |
|---|---|
| Traded as | LSE: LLOY NYSE: LYG |
| Industry | Banking Financial services |
| Founded | 2009 (Lloyds Bank: 1765) (Bank of Scotland: 1695) (Trustee Savings Bank: 1810) (Halifax: 1853) |
| Headquarters | London, United Kingdom |
| Area served | Worldwide |
| Key people | Sir Win Bischoff (Chairman) António Horta-Osório (Group Chief Executive) |
| Products | Retail banking Commercial banking Private Banking General insurance Life insurance Pensions |
| Revenue | £43.467 billion (2010)[1] |
| Operating income | £281 million (2010)[1] |
| Net income | (£258 million) (2010)[1] |
| Total assets | £991.6 billion (2010)[1] |
| Total equity | £46.061 billion (2010)[1] |
| Owner(s) | H.M. Government (41%) |
| Employees | 104,230 (2010) |
| Subsidiaries | Lloyds TSB Bank plc, Lloyds TSB Scotland plc, Bank of Scotland plc |
| Website | LloydsBankingGroup.com |
Lloyds Banking Group plc (LSE: LLOY) is a major British financial institution, formed through the acquisition of HBOS by Lloyds TSB in 2009. As at February 2010, HM Treasury held a 41% shareholding through UK Financial Investments Limited (see 'Government stake' below). The Group headquarters is located at 25 Gresham Street in London, with its registered office on The Mound, Edinburgh. Lloyds Banking Group's activities are organised into four business divisions: Retail Banking (including Mortgages), Wholesale, Life, Pensions & Insurance, and Wealth & International. Lloyds' extensive operations span the globe including the US, Europe, Middle East and Asia.
Following the takeover, the HBOS name ceased to be used publicly. The Halifax brand, products and pricing has been discontinued in Scotland, where only the Bank of Scotland brand remains of the former HBOS businesses. This resulted in a number of Halifax customers being transferred to Bank of Scotland. The Halifax and Lloyds TSB brands will be used in England and Wales, with each offering different products and pricing. In his first interview as Lloyds Banking Group's new CEO António Mota de Sousa Horta Osório told The Banker that "We will keep the different brands because the customers are very different in terms of attitude".[2]
The group is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index. It had a market capitalisation of approximately £17.7 billion as of 23 December 2011, making it the 23rd-largest company on the London Stock Exchange.[3]
Contents |
Lloyds TSB was created in 1995, when the Lloyds Bank and the Trustee Savings Bank ("TSB") agreed to merge,[4] creating at that time the second-largest bank in the UK by market capitalisation after HSBC Holdings; and the largest by market share.
With a history dating to the 17th century, Bank of Scotland is the oldest surviving bank, after the Bank of England, in what is now the United Kingdom. In 2001, a wave of consolidation in the UK banking market led the former Halifax Building Society, which traces its roots to 1853, to agree a £10.8 billion merger with the Bank of Scotland; Halifax is now used as brand for its the Bank's branches in England, Wales and Northern Ireland and for savings and mortgages in Scotland.
The creation of Lloyds TSB was the beginning of a large-scale consolidation in the UK banking market. In 1995, the merger between TSB and Lloyds Bank formed Lloyds TSB Group plc, one of the largest forces in domestic banking.[4] In June 1999, TSB and Lloyds Bank branches in England and Wales were re-branded Lloyds TSB. Branches in Scotland came under the new brand of Lloyds TSB Scotland, which now had branches stretching from the Northern Isles to the Mull of Galloway.
The first chairman of the merged bank was Sir Robin Ibbs. Lloyds Bank was one of the oldest banks in the UK, tracing its establishment to Taylors and Lloyds founded in 1765 in Birmingham by John Taylor and Sampson Lloyd.[5] Through a series of mergers, Lloyds emerged to become one of the Big Four banks in the UK. The TSB can trace its roots back to the first savings bank founded by Henry Duncan in Ruthwell, Dumfriesshire in 1810. The TSB itself was created in 1985, by an Act of Parliament that merged together all the remaining savings banks in England & Wales under TSB Bank plc and in Scotland as TSB Scotland plc (excepting Airdrie Savings Bank which remains the only independent savings bank in the UK) .[6]
In 2000, the group acquired Scottish Widows, a mutual life-assurance company based in Edinburgh in a deal worth £7 billion.[7] This made the group the second-largest provider of life assurance and pensions in the UK after the Prudential. In September the same year, Lloyds TSB purchased Chartered Trust from the Standard Chartered Bank for £627m to form Lloyds TSB Asset Finance Division which provides motor, retail and personal finance in the United Kingdom under the trading name Black Horse.[8]
Lloyds TSB continued to take part in the consolidation, making a takeover bid for the Abbey National in 2001, although this was later rejected by the Competition Commission.[9] In October 2003, Lloyds TSB Group agreed the sale of its subsidiary, NBNZ Holdings Limited comprising the Group's New Zealand banking and insurance operations to Australia and New Zealand Banking Group Limited.[10] In July 2004, Lloyds TSB Group announced the sale of its business in Argentina to Banco Patagonia Sudameris S.A.[11] and its business in Colombia to Primer Banco del Istmo, S.A.
On 20 December 2005, Lloyds TSB announced that it had reached an agreement to sell, for cash, the credit-card business of Goldfish to Morgan Stanley Bank International Limited for a premium of £175m.[12] In 2007, Lloyds TSB announced that it has sold its Abbey Life insurance division to Deutsche Bank for £977m.[13]
Lloyds TSB also became the first mainstream bank to launch a sharia-compliant business account, with the Islamic Business and Corporate account being the latest financial product to be run in line with sharia principles,[14] which has also resulted in some controversy.[15]
On 17 September 2008, the BBC reported that HBOS was in takeover talks with Lloyds TSB, in response to a precipitous drop in HBOS's share price.[16] The takeover talks concluded successfully that evening, with a proposal to create a banking giant which would hold a third of the UK mortgage market.[17] An announcement was made at 0700 on 18 September 2008.[18][19]
On 19 November 2008, the new acquisition (and government preference share purchase) was agreed by the Lloyds TSB shareholders.[20] A similar vote of HBOS shareholders on 12 December 2008 resulted in overwhelming approval of the takeover.[21] Lloyds TSB Group changed its name to Lloyds Banking Group upon completion of the takeover of HBOS on 19 January 2009.[22]
On 12 February 2009, the CEO of Lloyds group, Eric Daniels, was questioned about the banking crisis during a session of the Treasury Select Committee of the House of Commons. One of the key issues concerned Lloyds' takeover of HBOS in 2008, and the amount of due diligence carried out before the acquisition. He said that a company would always like to do more due diligence on another company, but there are legal limits on how much is possible prior to an actual acquisition. Losses were a little higher than the £10 billion originally identified by the due diligence owing to write-offs of property loans due to falling property prices and the lack of demand. The then-Chairman of Lloyds, Sir Victor Blank, confirmed in an August 2009 interview with the BBC's Robert Peston[23] that losses had been "at the worst end of expectations", but what had surprised the Lloyds board was the speed at which the losses happened, due to the unexpectedly sharp contraction of the world economy in the last quarter of 2008 and the early part of 2009. This position was confirmed by Archie Kane (senior Lloyds executive in Scotland) in evidence to the Scottish parliament's economy committee in December 2009.[24]
On 13 October 2008, PM Gordon Brown announced a government plan where the Treasury would invest £37 billion ($64 billion, €47 billion) of new capital into several major UK banks to avert a collapse of the financial sector. The banks included Royal Bank of Scotland Group plc, Lloyds TSB and HBOS Plc.[25][26]
(Barclays only avoided taking a capital investment from the UK Government by raising capital privately, whilst HSBC moved capital to its UK business from other parts of its organisation around the world.)[27]
It has been confirmed that Lloyds TSB would have been required by the FSA to take more additional capital from the government if it had not taken-over HBOS.[28]
After the recapitalisations of HBOS and Lloyds TSB and Lloyds TSB's January 2009 acquisition of HBOS, the Government was holding a 43.4% stake in Lloyds Banking Group ordinary (voting) shares and £4bn of preference (non-voting) shares.
Then in February 2009, after it became apparent that the recession would be deeper than originally anticipated, the FSA was instructed to stress test the banks against a severe economic downturn. The FSA has stated that the assumptions underlying the FSA Stress Test were not intended to be a forecast of what was likely to happen, but were designed to simulate a very severe (near catastrophic) economic scenario. These assumptions included:
The conclusion from this exercise was that Lloyds would need additional capital to enable it to absorb the future losses on loans that would arise if such a severe scenario ever came to pass. As the wholesale funding markets were at that stage effectively closed, Lloyds made a deal with the UK government in March 2009 consisting of two elements:
However, with Lloyds impairments having peaked in the first half of 2009, by the middle of 2009 the Asset Protection Scheme increasingly looked like a poor deal for Lloyds. Following negotiations, the government confirmed on 3 November 2009 that Lloyds would not enter the scheme (although RBS still would). Instead, Lloyds launched a rights issue to raise capital from existing shareholders – as an existing 43.4% shareholder, the government chose to take part in this and thus maintain its shareholding at 43.4%.[32][33] Following this, the National Audit Office has calculated the government's average buying price for its entire stake in Lloyds as about 74p.[34]
It was announced in the Government's Pre-Budget Report on 9 December 2009 that the forecast for the total loss to taxpayers for all the bank bail-outs (not just Lloyds) had been reduced from £50bn to just £10bn – in part because of the restructuring of the Government's Asset Protection Scheme.[35]
The final part of the December 2009 capital raising involved the issuing of new shares to existing debt holders in February 2010. This diluted existing shareholders, including the UK Government whose shareholding was reduced from 43.4% to c.41%.[36]
On 3 November 2009, a series of announcements were made.[39]
Avoidance of Government Asset Protection Scheme (GAPS) through at least £21 billion additional core capital generation:
Tier 1 capital ratio thus increased to equivalent of 8.6% as at June 2009.
Payment to HMT of £2.5bn GAPS 'exit fee' to cover the effective protection provided by the scheme since it was proposed earlier in the year.
According to Union leader, the Lloyds Banking Group had cut 30,000 jobs since February 2009, but in August 2011, the company announced to cut another 1,300 jobs.[40]
Due to EU competition regulations, which is supported by the UK government[41] 620 Lloyds Banking Group branches are to be sold [42] and will effect the retail banking business with at least 4.6% personal current account market share and approximately 19% of the Group’s mortgage book,
The new company Verde[43] will include:
The EU Commission has required that the sell-off be completed within four years.
Lloyds Banking Group's new CEO António Mota de Sousa Horta Osório told The Banker that one of his first actions is to "accelerate the sale of the 600 branches" in order to meet the 2013 deadline.[2] Lloyds Banking Group most recent results show first quarter losses of £3.47 billion, down from the £721 million profit it recorded at the same stage last year.[44] 3 November 2009</ref>[45] The 620 branches which will be sold will be under a new group called Verde [46] with a number of parties interested in buying. [47]
The Group is organised as follows:
Lloyds TSB operates in England and Wales as Lloyds TSB Bank plc and in Scotland as Lloyds TSB Scotland plc.
| 2008 | 2009 | 2010 | |
|---|---|---|---|
| Stability – Core T1 Capital Ratio | 6.4% | 8.1% | 10.2% |
| Income | £21,355 million | £23,964 million | £23,641 million |
| Profitability (before tax) – Continuing Basis | £6,713 million loss | £6,300 million loss | £2,212 million |
| Impairment Charge | £14,880 million | £23,988 million | £13,181 million |
| Net Interest Margin | 2.01% | 1.77% | 2.10% |
| Efficiency – Cost-Income Ratio | 48.4% | 46.2% | |
| Lending (Gross) – Mortgages | £28 billion | £35 billion | £30 billion |
| Lending (Gross) – Large Businesses | £25 billion | £38 billion | |
| Lending (Gross) – Small & Medium Businesses | £10 billion | £11 billion |
In December 2008 the British anti-poverty charity War on Want released a report documenting the extent to which Lloyds and other UK commercial banks invest in, provide banking services for and make loans to arms companies. The charity writes in its report that Lloyds holds shares in the UK arms sector totally £717.5 million, and serves as principal banker for BAE Systems, the UK's largest arms company. The report also details Lloyds's dealings with known producers of cluster munitions and depleted uranium.[54]
Lloyds TSB stands accused of "cutting off aid to Gaza". In November 2008 the bank delivered a notification to the Islamic Bank of Britain (IBB) to cease all dealings with British charity Interpal – a British non-political and non-profit making charity set up to help Palestinians, and one of the few sources of humanitarian assistance in occupied Gaza. The notification was delivered without warning or prior consultation. The following day, the UN announced that it had run out of food supplies and essentials in the Gaza Strip.[55]
A 2010 report by the Wall Street Journal described how Credit Suisse, Barclays, Lloyds Banking Group, and other banks were involved in helping the Alavi Foundation, Bank Melli, the Iranian government, and/or others circumvent US laws banning financial transactions with certain states. They did this by 'stripping' information out of wire transfers, thereby concealing the source of funds. Lloyds Banking Group settled with the government for $350,000,000.[56]
In 2009, a case was brought against Lloyds by a department of the UK Treasury (HM Revenue & Customs) on grounds of tax avoidance. Lloyds are accused of pouring hundreds of millions of pounds into transatlantic tax avoidance schemes in the form of loans to American financial institutions.[57]
On Friday, 13 February 2009, Lloyds Banking Group revealed that the losses at HBOS were greater than had been anticipated at around £10billion. The share price of Lloyds Banking Group plunged 32% on the London Stock Exchange, carrying other bank shares with it.[58] The acquisition was carried out rapidly in 2008, however due diligence undertaken by Lloyds indicated an anticipated £8.5bn HBOS loss. The Lloyds management cited a deterioration in the economy subsequent to the due diligence for the HBOS losses increasing from the anticipated £8.5bn to the actual £10bn.
In July 2007, Euromoney announced Lloyds TSB as the winners of its Awards for Excellence.[59]
In June 2008, Lloyds TSB Group came top in the Race for Opportunity’s (RfO) annual survey.[60]
In May 2009, Lloyds TSB Corporate Markets was recognised as ‘Bank of the Year’ for the fifth year running at Real FD/ CBI FDs' Excellence Awards.[61]
In October 2009's "What Investment" magazine awards, Halifax won Best Savings Account Provider and Halifax Share Dealing was also named Best Share Dealing Service.[62]
In October 2009's "Consumer Money Awards", Halifax won Best First Time Mortgage Provider. In addition, Lloyds' brands were commended in several other categories, including Cheltenham & Gloucester for Best Remortgage Provider and Best High Street Mortgage Provider; Lloyds TSB for Best Current Account Provider, Best Student Account Provider and Best Customer Service Provider; and Halifax for Best ISA Provider and Best High Street Savings Provider.[63]
In November 2009's "Personal Finance Awards", Halifax was awarded Best Premium Current Account (for the Ultimate Reward Current Account) and Best Savings Account Provider. In the Best Mortgage Provider category, Halifax was highly commended. Halifax Sharedealing was named Best Online Stockbroker for the third year in a row, and was highly commended in the Excellence in Customer Service category. Halifax Investments was named Best Investment Product Provider. Lloyds TSB won Best Student Finance/Banking Provider and was also highly commended in the Best Current Account Provider awards. Scottish Widows was highly commended in the Best Pension Provider category.[64]
In November 2009's "Your Mortgage Awards", Halifax won the award for Best Overall Mortgage Lender for the eighth year running, as well as the award for Best Large Loans Mortgage Lender. Birmingham Midshires was named Best Specialist and Buy-to-Let Mortgage Lender, and Lloyds TSB won the award for Best Overseas Mortgage Lender.[65]
Lloyds TSB was appointed the first Official Partner for the London Olympics 2012.[66]
Lloyds TSB is also currently the official sponsor for the Asian Jewel Awards. The awards recognise the contribution made by the Asian community in Britain today. An example of this support is the bank's sponsorship of Peter Santamaria-Woods in motor racing.[67]
Lloyds Banking Group is an active supporter of disability rights and best practice; in addition to being a Gold member of the Employers’ Forum on Disability, in 2010 it helped create and currently sponsors the RADAR (The Royal Association for Disability Rights) Radiate network,[68] the goal of which is to support and develop a talent pool of people with disabilities and health conditions and potentially act as a source of thinking for organisations on how 'disabled talent' is best spotted and developed.
|
|||||||||||||||||