Financial News

  • 30 January 2014, 2:07

Lloyds Eyes Takeover Deals In 'Symbolic' Move

Lloyds Banking Group has begun scouting for takeover deals that would mark a symbolic step in its recovery from the financial crisis that left UK taxpayers as its largest shareholder.

Sky News has learnt that Lloyds is at the early stages of examining acquisitions that could bolster its presence in the consumer credit, home insurance and credit card markets.

Under the state aid deal with Brussels that cleared the way for the last Labour government to inject more than 20bn into Lloyds to keep it afloat, the bank is not allowed to pursue takeover deals above a modest size until after it has met conditions including the spin-off of more than 630 of its branches.

That network, which has been rebranded under the TSB name, is being floated on the stock market this year in a move that will see Lloyds ultimately relinquishing ownership of it.

The new acquisition drive is being spearheaded by Toby Rougier, a senior Lloyds executive, although insiders said he had not yet put any proposed deals to the bank's board.

Any deal which entailed Lloyds growing its presence - even in areas where it is comparatively small - might attract political attention in the wake of the Labour leader Ed Miliband's call for major banks to face a cap on their share of the current accounts market.

Lloyds, which owns the Halifax network, is by far the biggest player in high street consumer banking, but has a smaller share of the market for lending to small and medium-sized companies.

It also has a 17% share of the consumer credit sector; 15% of home insurance; and 16% in credit cards, according to people close to the bank.

A source said that Lloyds, now 33%-owned by taxpayers, was concentrating on organic growth opportunities, but conceded that acquisitions were now "back on the agenda" for the first time in five years.

LDC, the group's private equity arm, has been permitted to pursue takeovers during the last five years but these have been relatively small in scale.

Another symbolically important moment is expected to arrive with Lloyds' full-year results next month, when analysts expect Antonio Horta-Osorio, its chief executive, to announce it has been given the green light to resume paying dividends.

Lloyds' focus since the bail-out has been on shedding assets, including its stake in Sainsbury's Bank, billions of pounds-worth of shipping and property loans, and the fund manager Scottish Widows Investment Partnership.

The bank has also been shedding tens of thousands of jobs, with the latest 1,300 roles to be axed being announced earlier this week.

A Lloyds spokesman declined to comment on potential acquisitions.

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