LLOYDS BANKING GROUP: Lloyds and TSB to part ways

The British banking giant Lloyds TSB is to split into two separate banks, according to a letter sent to their UK-based customers this month. The Lloyds Banking Group, which owns Lloyds TSB, Halifax, and the Bank of Scotland, has announced that it is in the early stages of preparing part of its business to eventually be spun off as an entirely independent high street bank to be known as TSB. The move is in response to European Union legislation aimed at encouraging more competition in the UK’s banking sector, which has been rocked by the financial crisis and reports of mismanagement and greed. In the past fifteen years, several banks have either ceased trading or have being absorbed and merged by larger banks, meaning customers have less choice when searching for financial services on the high street. The divestment of the two banks, dubbed ‘Project Verde’, is scheduled to take place in August of this year.

Two generations
Two generations (Photo credit: the Magnificent Octopus)

Holders of Lloyds’ 16 million personal and small business accounts received a letter last week informing them of new terms and conditions drafted in by the Group as it prepares for the de-merger  The changes to both the bank-customer agreement and the bank’s structure are expected to kick into action after the 14th of August 2013. Customers have been also been sent booklets explaining the impact of the new changes on their banking activities.

The Lloyds-TSB split means many customers will see their accounts transferred over to new management, and a sizeable amount of Lloyds TSB branches will be re-branded.  Lloyds TSB will still maintain operations for 1,200 branches which are likely to be known from August under its pre-merger name of Lloyds Bank plc. The breakup will take place under the terms of the bank’s Scottish licence and Lloyds TSB have assured its customers that the changes will be made as smooth as possible, with no changes in banking procedure for clients whose accounts will continue remaining under Lloyds’ care. Lloyds TSB is also advising account holders who are not happy with the changes to contact the bank’s helpline and close their accounts. The changes will also affect Lloyds TSB ATM devices in addition, with control of some also being passed to the new bank. Lloyds customers will still be able to use TSB ATMs to withdraw cash, pay bills and make bill deposits or account transfers, but will no longer be able to check account balances.

Lloyds TSB Scotland, the division of the bank for customers across the border and the holder of the merger licence, will be renamed TSB with all Scottish branches moving over to the new bank. TSB will continue to operate as a component business under the Lloyds Banking Group’s umbrella until a new buyer is found, when the business will be sold off under an Initial Public Offering (IPO). It is expected to be re-listed under a separate ticker on the London Stock Exchange once the handover of ownership is completed. It is not officially known if there has been any early interest offered in purchasing the new spinoff, although a message published by Lloyds TSB on their website on the 24th of April said negotiations were taking place with the Co-Operative Group – a company that operates in fields as diverse as banking, funeral services and groceries – over the transfer. After discussions however, the Co-op declined to put forward a purchase offer.

English: A Lloyds TSB bank branch in Enfield, ...
English: A Lloyds TSB bank branch in Enfield, London. (Photo credit: Wikipedia)

Lloyds TSB was established in 1995 from the merger of Lloyds Bank with the TSB Group. Lloyds was founded in Birmingham, West Midlands in 1765, and was until its absorption, traditionally considered one of the ‘Big Four’ clearing banks. By June 1999, the new business’s distinctive logo of a rearing black horse on a green and blue field – a combination of its constituent banks’ emblems began appearing on branches and literature. The year 2001 saw the Lloyds Banking Group prepare a bid to acquire Abbey National, but was rebuffed by the UK’s Competition Commission. Abbey was later bought by Spanish banking group Santander three years later. In 2009, the Lloyds TSB group bought out HBOS, owner of the Bank Of Scotland and the Halifax building society. The HBOS brand ceased to exist and Lloyds TSB Group was subsequently renamed Lloyds Banking Group.

In the aftermath of the 2008 credit crunch and ensuing recession, Britain’s banking sector found itself in hot water. Financial mismanagement of banking assets, unpaid mortgages and the politically controversial inflated bonuses and salaries of top bankers saw a crisis in the City. Billions of pounds of taxpayers’ money was pumped into the ailing industry to stop banks from folding. The UK government acquired a 43.4% stake in the Lloyds TSB Group, partially nationalising it as both the public and government contemplated greater statutory regulation of the financial sector. In line of new EU directives announced to break up monopolies in the banking industry in some of Europe’s richer nations, the bank announced that it would sell a standalone retail banking business of 632 branches to comply with EU state aid requirements.

Lloyds TSB customers with concerns or questions are advised to visit lloydstsb.com/transfer for more information on the changes, including finding out if their local branch of Lloyds TSB will be included in the new bank’s share of its physical outlets. Alternatively they can visit their local branches or consult the bank’s literature. Lloyds TSB are also operating a phone hotline where customers can speak to advisors. Dial 0845 3 000 000 (24 hours a day, 7 days a week – United Kingdom callers only, local rate applies)

The European Commission’s rulings regarding the Lloyds TSB dissolution can be found by visiting  lloydstsb.com/transfer and by searching “Lloyds Banking Group” at ec.europa.eu .

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“Changes to terms and conditions and what they mean for you” – Catherine Kehoe, Lloyds TSB (June 2013)
“Changes to terms and conditions” – Lloyds TSB (April 2013)
“Lloyds Banking Group” – Wikipedia LINK 
“Lloyds TSB” – Wikipedia LINK 
“We’ve agreed to transfer some of our branches and accounts to a new owner” – Lloyds TSB (24 April 2013) LINK 
“Update on 24th April 2013” – – Lloyds TSB (24 April 2013) LINK

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