Lloyds Banking Group will tomorrow set out plans to boost lending to small companies by more than £1 billion this year, as chief executive Antonio Horta-Osorio tries to rebuild trust in the state-backed firm.
As part of a wide-ranging strategy, he will also pledge that the bank will help more than 80,000 first-time buyers get on the housing ladder – up from last year’s target of 60,000 – and increase the number of women holding senior roles at the group.
The charm offensive comes less than two months after Lloyds was fined a record £28 million by the City regulator for putting staff at its Bank of Scotland, Halifax and Lloyds TSB branches under pressure to hit their sales targets or face demotion. The so-called “champagne bonuses” even led to one adviser selling protection products to himself, his wife and a colleague to prevent himself from being demoted.
Horta-Osorio, who will unveil the bank’s “helping Britain prosper plan” in a speech tomorrow, said his commitments were an important step in regaining trust in the banking industry.
He said: “The reputational impact of the financial crisis upon the banking industry’s stature has been immense.
“Rebuilding a sound reputation founded on the highest standards of responsible behaviour is key to the industry’s long-term success. But words alone are not enough to change public perception and regain trust. We must be able to provide meaningful commitments and allow ourselves to be independently measured against those.”
More details about the group’s targets and how its progress will be monitored are expected to be unveiled on 6 March, when the bank publishes its annual report.
Figures from the Bank of England show net lending to small firms shrank by £327m million in December.
Lloyds’ target to increase the flow of credit comes just days after the group, which is 33 per cent owned by the taxpayer, announced it was shedding more than 1,000 jobs, including branch-based small business advisers. Business Secretary Vince Cable has said he was “very surprised and disappointed” by the cuts.
Thousands of small business customers will also be told that they will no longer have face-to-face access to an adviser at Lloyds because they do not earn the lender enough money.
Horta-Osorio claims the group will be the first bank to measure its “economic and social impact” by having the progress against its commitments independently monitored.
He said: “I believe our ‘helping Britain prosper plan’ measures, the first of their kind, can help deliver a positive step-change in regaining positive public sentiment and trust in our industry.”
Of the 5,000 most senior roles at Lloyds, 28 per cent – or 1,400 – are currently held by women. The group’s Scottish arm is headed by Lady Susan Rice, who is also a non-executive director at the Bank of England.
By 2020, Horta-Osorio wants women to hold 40 per cent of the group’s senior positions, which means an extra 600 will have to be appointed or promoted within the next six years.
Lord Davies of Abersoch, who carried out a review for the UK government, has called for FTSE 100 boards to be at least 25 per cent female by the end of next year. Lloyds Banking Group has an all-male executive team – comprising Horta-Osorio, chief risk officer Juan Colombas and finance director George Culmer – though women account for a third of its non-executive directors.
Davies is vice-chairman of private equity group Corsair, which teamed up with the Church of England last year to seal a £600m deal to spin off 314 branches from Royal Bank of Scotland. The investors aim to return the Williams & Glyn brand to the high street after a break of almost 30 years as they prepare for a flotation of the business.