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Lloyds Banking Group
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Lloyds Banking Group plc is a leading global British based financial institution, formed through the acquisition of HBOS by Lloyds TSB in 2009. It is a part-nationalised British banking and insurance holding company in which HM Treasury holds a 65% controlling shareholding, through UK Financial Investments Limited. The Group headquarters are located at 25 Gresham Street in London, with its registered office at Henry Duncan House, 120 George Street Edinburgh. Lloyds Banking Group's activities are organised into three business units: UK Retail Banking and Mortgages, Insurance and Investments, and Wholesale and International Banking.
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Encyclopedia
Lloyds Banking Group plc is a leading global British based financial institution, formed through the acquisition of HBOS by Lloyds TSB in 2009. It is a part-nationalised British banking and insurance holding company in which HM Treasury holds a 65% controlling shareholding, through UK Financial Investments Limited. The Group headquarters are located at 25 Gresham Street in London, with its registered office at Henry Duncan House, 120 George Street Edinburgh. Lloyds Banking Group's activities are organised into three business units: UK Retail Banking and Mortgages, Insurance and Investments, and Wholesale and International Banking. Lloyds Banking Group provides a service to a large number of clients in a broad range of markets. Lloyds' extensive operations span the globe including the US, Europe, Middle East and Asia. Post-merger it has become one of the largest financial institutions in the world.
Before the 2007-08 credit crunch it was the fifth largest banking group in the UK, formed in 1995 by the merger of Lloyds Bank and the Trustee Savings Bank (TSB). The company operated in England and Wales as Lloyds TSB and in Scotland as Lloyds TSB Scotland plc. Its other subsidiaries included the mortgage bank Cheltenham and Gloucester, life assurance company Scottish Widows and finance house Black Horse.
Shareholders in both Lloyds TSB and HBOS groups voted in favour of the takeover, which completed on 19 January 2009. The HBOS name will cease to be used publicly, although it will still exist as an employing entity. The Bank of Scotland brand will be used for all merged bank branches in Scotland. The Halifax and Lloyds TSB brands will be retained in England and Wales.
History
Formation
Lloyds TSB was created in 1995, when the Lloyds Bank and the Trustee Savings Bank ("TSB") agreed to merge, creating at that time the second-largest bank in the UK by market capitalisation after HSBC Holdings; and the largest by market share. The first chairman of the merged bank was Sir Robin Ibbs.
Lloyds Bank was one of the oldest banks in the UK, founded by John Taylor and Sampson Lloyd in 1765 in Birmingham. 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 U.K.) .
UK expansion
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.
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 has branches stretching from the Northern Isles to the Mull of Galloway.
In 2000, the group acquired Scottish Widows, a mutual life-assurance company based in Edinburgh in a deal worth £7 billion. 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.
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.
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.
In July 2004, Lloyds TSB Group announced the sale of its business in Argentina to Banco Patagonia Sudameris S.A. 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 G.B.P.175 million.
In 2007, Lloyds TSB announced that it has sold its Abbey Life insurance division to Deutsche Bank for £977m.
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.
Acquisition of HBOS
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 connected to short selling. 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.. An announcement was made at 0700 on 18 September 2008.
On 19 November 2008, the new acquisition (and government preference share purchase) was agreed by the Lloyds TSB shareholders. A similar vote of HBOS shareholders on on 12 December 2008 resulted in overwhelming approval of the takeover.
Lloyds TSB changed its name to Lloyds Banking Group upon completion of the takeover of HBOS on 19 January 2009
October 2008 Bailout
On 13 October, 2008, PM Gordon Brown announced a government plan where the Treasury would infuse £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.
Government controlling stake
After the October 2008 bailouts of RBS, HBOS and Lloyds TSB and Lloyds TSB's January 2009 acquisition of HBOS, the Government was holding a 43% stake in Lloyds Banking group, but then in March 2009, after it became apparent that the HBOS acquisition had weakened Lloyds (HBOS having declared losses of £11bn), the Government announced it would increase its stake in Lloyds to 65% (77% if non-voting preference shares are included).
Operations
The Group is organised as follows:
- UK Retail Banking - Helen Weir, Group Executive Director
- Provides a full range of banking and financial services to some 16 million personal customers through over 2,000 branches across the UK, as well as telephone and internet banking services. Cheltenham & Gloucester is the Group's specialist residential mortgage provider, selling its products through branches of C&G (throughout Great Britain) and Lloyds TSB Bank in England and Wales. The Group is one of the largest mortgage lenders in the UK, with a market share of 8.8 per cent as at the end of 2006. Profit before tax from UK Retail Banking in 2006 was £1,549 million.
- Lloyds TSB Bank - England and Wales
- Lloyds TSB Scotland - Scotland
- Halifax - England and Wales
- Cheltenham and Gloucester- mortgage and savings bank
- Birmingham Midshires - mortgage and savings brand
- Bank of Scotland - Scotland
- Intelligent Finance
- Scottish Widows Bank - direct banking arm of Scottish Widows
- Insurance and Investments - Archie G Kane, Group Executive Director
- Scottish Widows is the Group's specialist provider of life assurance, pensions and investment products, distributed through the Lloyds TSB branch network, through independent financial advisers and directly via the telephone and the internet. Insurance and Investments also includes general insurance underwriting and broking, and fund management. Profit before tax from Insurance and Investments in 2006 was £950 million.
- Wholesale and International Banking - G Truett Tate, Group Executive Director
- Provides banking and related services for major UK and multinational corporates and financial institutions, and small- and medium-sized UK businesses. It also provides asset finance and manages Lloyds TSB Group's activities in financial markets through its treasury function and provides banking and financial services overseas. Profit before tax from Wholesale and International Banking in 2006 was £1,640 million.
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- Blackhorse
- Offshore Banking
- Bank Of Scotland Corporate
Awards and recognition
In July 2007, Euromoney announced Lloyds TSB as the winners of its Awards for Excellence.
In April 2008, Lloyds TSB Corporate Markets was recognised as ‘Bank of the Year’ for the fourth year running.
In June 2008, Lloyds TSB came top in the Race for Opportunity’s (RfO) annual survey.
Controversy
Cutting off aid to Gaza
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.
Tax avoidance
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.
HBOS bad loans
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. The acquisition was carried out rapidly in 2008, and due diligence may not have revealed the large losses at HBOS announced by Lloyds.
Sponsorships
Lloyds TSB was appointed the first Official Partner for the London Olympics 2012.
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.
External links
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