Lloyds Bank

Lloyds Bank is a large British bank that has recently run into financial trouble and is now partly owned by the British taxpayer. Lloyds currently has 148,000 employees, although this is expected to sharply reduce as a result of branch closures and merging of head office functions. It has £17 billion worth of assets. Due to its recent fast expansion the Lloyds group offers its retail services under a number of brands, the most prominent of which are:

Lloyds - This is the biggest network and is a traditional bank offering safe and solid investments and lending to small businesses. It was founded in London in 1690.

TSB - This was a Scottish brand that largely aimed at selling banking and investment services to the working class. Although it developed an English branch network by the time it merged with Lloyds, its English branches were renamed as Lloyds. It still has a Scottish branch network.

Cheltenham & Gloucester - This former building society was taken over by Lloyds TSB in the 1990s and converted into a boutique savings and mortgages operation, advertising as an operation that concentrated on these two products alone. It expanded under Lloyds ownership, and it looks like it is likely that Lloyds is going to be forced to sell the network, customer base and brand.

Halifax - This former building society was the largest building society in the UK until it converted into a bank. It has an extensive branch network and after its merger with the Bank of Scotland it kept its name and concentrated on savings accounts, current accounts and consumer lending. It was seen as one of the more aggressive players in the banking market before the credit crunch.

Bank of Scotland - This is one of the two big Scottish banks and has an extensive branch network in Scotland where it offers the same consumer and small business banking services of any medium sized or large banks. The English operations tended to have fewer branches in regional centres and tended to concentrate on larger business customers.

Due to the number of different brands, and a set of quick mergers there are now a large number of places where there are two, three or more of these branches in close proximity, and it is predicted that there will be a programme of mass branch closures in the near future.

Birmingham Midshires

Birmingham Midshires is a former building society that was taken over by the Bank of Scotland. It closed or renamed its branches as Halifax. It is now a specialist mortgage operation that dealt with “exotic” mortgages such as landlord “buy to let” mortgages and mortgages for borrowers with poor credit ratings, low deposits or low earnings.

Merger with Halifax Bank of Scotland

During the credit crunch a large Scottish banking groups collapsed, Halifax Bank of Scotland (HBOS). This meant that a large amount of state aid was needed to keep them afloat. For various political reasons the British government, which was dominated by Scottish ministers and politically weak, did not want to be seen as using English taxpayers money to prop up Scottish banks. The government offered the Halifax Bank of Scotland group to Lloyds TSB, which had been frustrated in their previous efforts to expand. This was taken up and HBOS shareholders were offered what were later judged to be generous terms.

Government Partial Takeover

Although Lloyds was a conservatively run and financially strong bank, HBOS had large debts. As a result of this merger and a deepening of the credit crisis the newly merged group now found that it had to seek government help any way and under European Union law the government had to then take out a stake in the bank in return. This was agreed, but at the price of the government diluting the share capital and taking 43% of the equity, leaving the existing shareholders with 57%. The European Union also forced the merged group to divest itself of a number of its operations.

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