Dropping the TSB
London-based Lloyds Banking Group operates through four main
business units: retail, wholesale, insurance, and wealth and
international. Its retail division caters to an estimated 30
million personal customers, operating through brand names such as
Lloyds TSB, Halifax and Bank of Scotland. The wholesale unit
mainly operates through Bank of Scotland in Scotland, and Lloyds
TSB in England and Wales, while insurance does business mainly
under Scottish Widows. Wealth and international has three
main subdivisions: private banking, asset management and
international banking; the unit operates under several brand names
in more than 36 countries worldwide.
Formerly known as Lloyds TSB, Lloyds Banking Group was formed in
January 2009 after Lloyds TSB acquired mortgage giant HBOS (Halifax
Bank of Scotland). The previous incarnation of Lloyds was
also created from a huge merger. In 1995, Lloyds Bank and TSB
Group combined to form Lloyds TSB, then the second-biggest U.K.
bank by market cap (after HSBC). Of course, Lloyds can trace
its history much further back-it was established as the private
bank of Taylors & Lloyds in Birmingham in 1765. Over the
next 200 years, the bank grew through mergers and organic expansion
to become one of the biggest banks in the U.K.
The history of the savings bank movement (where the TSB came
from) goes back to 1810 when the Revd Henry Duncan founded the
world's first self-supporting savings bank in Ruthwell,
Dumfriesshire. The savings banks remained local organizations
until the 1970s when the banks amalgamated into regional
institutions. TSB Group plc was formed in 1986 following
flotation on the Stock Exchange.
In 1999, four years after Lloyds TSB was created, all TSB and
Lloyds Bank branches in England and Wales were rebranded with the
identity of the new entity (Lloyds TSB). A year later, the
bank paid £7 billion pounds to acquire Scottish Widows, an
Edinburgh-based mutual life-assurance company, further
strengthening Lloyds TSB's grip in the U.K. market. Also in
2000, Lloyds TSB established its asset finance division after its
£627 million pound purchase of Chartered Trust from Standard
Lloyds TSB sold its credit card business Goldfish to Morgan
Stanley in 2005 for £1 billion pounds and sold its Abbey Life
insurance business to German banking giant Deutsche Bank for a cash
consideration of £977 million in 2007. Lloyds also made
headway in the U.K. banking market when it became the first among
its peers to offer Sharia-compliant business accounts.
In September 2008, only two days after the infamous fall of
Lehman Brothers, it was revealed that Britain's Lloyds TSB was in
takeover talks with HBOS plc; investors became weary of HBOS'
funding capability after the Lehman collapse, sending the U.K.'s
largest mortgage lender's shares plunging. Two months later,
the acquisition and participation in the U.K. government's
recapitalization scheme were both agreed upon by Lloyds Banking
Group's shareholders (HBOS shareholders approved of the takeover a
few weeks later). The acquisition was officially completed on
January 16, 2009, at which point Lloyds TSB changed its name to
Lloyds Banking Group.
A new chair
In May 2009, Lloyds Banking Group Chairman Victor Blank
said he would resign by the firm's annual general meeting in 2010,
a decision that came as the bank faced a tough financial situation
after purchasing HBOS in late 2008. Senior Independent
Director Lord Alexander Leitch was named as deputy chairman, and
the firm began to search for a successor to Blank.
Two months later, in July 2009, Lloyds named Winfried F. W.
Bischoff, a former chairman of Citigroup and adviser to the British
government, to succeed Blank as chairman as of September 15,
2009. Bischoff recently co-chaired a panel that released a
report favoring broad-based banking models.