Two quit as Lloyds looks to beef up board's experience

Published on Tuesday 22 September 2009 21:01

LLOYDS has parted company with two of its directors following shareholder pressure to recruit board members with more banking experience.

The twin departures, announced last night, mark the first official act for Sir Win Bischoff since he took over the chairmanship of the banking giant just over a week ago.

Carolyn McCall, chief executive of the Guardian Media Group, and Philip Green, head of Manchester-based United Utilities, will step down from their non-executive posts.

Green's last day will be 23 October while McCall will stay on until the end of the year.

Neither have worked for a bank in the past, although the departure of McCall has reduced the number of women on the Lloyds board to one – group executive retail director Helen Weir.

No replacements have been announced and the bank gave no indication when – or even if – new faces would replace them.

But it is understood UK Financial Investments (UKFI), the government body which oversees the taxpayers' 43 per cent stake in Lloyds, is keen to ensure the "right people" join the board.

Both non-execs volunteered to leave after it became clear their positions were under increasing scrutiny. In twin statements to the Stock Exchange, McCall and Green said they were leaving due to the "increasing time demands" required since the bank crisis.

McCall, who joined just a year ago, said: "Since my appointment to the board in October 2008, the level of time commitment properly required of a non-executive director in the banking sector has increased dramatically. The global banking crisis and the recent Walker report have thrown this issue into sharp relief.

"I have therefore decided, with regret, that the responsibilities of being a chief executive make it impossible to dedicate the time that I know is required to Lloyds."

Green joined the board in 2007.

Last month, reports indicated investors had called for Bischoff, who replaced Sir Victor Blank as chairman on 15 September, to beef up the number of non- executives with direct experience of banking.

In April, as part of its agreement to inject 12 billion into the troubled bank, the Treasury backed the appointment of two non-executive directors to the Lloyds board – Tony Watson, a former head of the Hermes pension fund management group, and Tim Ryan, chief executive of the US-based Securities Industry and Financial Markets Association.

A Lloyds spokesman last night said that the appointment of any further non-execs would be "situation normal" – meaning further appointments would be chosen by Lloyds.

UKFI is understood to be pleased by Bischoff's quick start. In a statement a spokesman for UKFI said: "We note the departure of Carolyne McCall and Philip Green from the Lloyds board. Win Bischoff continues to enjoy the full support of UKFI."

Yesterday, UKFI also confirmed that the government has not set a sale timetable or revenue targets for its shares in Britain's part- and fully- nationalised banks, thus reducing the risks taxpayers will lose out on a disposal.

John Crompton, head of market investments at UKFI, said: "There are no projections, no assumptions and hence no targets to hit. This greatly reduces the risk of our undertaking transactions which do not represent best value for the taxpayer."

UKFI, set up last December, also handles the 70 per cent stake in Royal Bank of Scotland, which it got after pumping 37bn into the lenders.

Scots giants 'operating a duopoly'

ROYAL Bank of Scotland and Lloyds Banking Group have been accused of running a "duopoly" in the small business lending market north of the Border, writes Nathalie Thomas.

The Federation of Small Businesses in Scotland warned there is a chronic lack of competition in the Scottish lending market, with RBS and Lloyds accounting for at least three-quarters of all lending to small firms. In a submission to an inquiry by the Scottish affairs committee in Westminster, the business body said that small firms are still struggling to secure fair financing deals because the banks have a "take it or leave it attitude".

Although banking in Scotland has always been dominated by the two big Edinburgh banks, the FSB argues that the situation has deteriorated since the financial crisis as foreign lenders such as the Irish and Icelandic banks have withdrawn from the UK market. The lobby group, which represents 20,000 small firms in Scotland, said that the global banking crisis has "left us dangerously close to a duopoly".

Colin Borland, public affairs manager for the FSB in Scotland, told The Scotsman: "Even at the best of times, competition in the small business banking market wasn't exactly cut-throat but a lot of foreign banks have now packed up and gone home. The lack of competition means that small businesses lose that ultimate sanction of taking their business elsewhere."

Lenders have no incentive to improve their deals because they realise customers are caught between a rock and a hard place, Borland added.

The FSB is pressing the UK government to improve competition north of the Border – potentially by turning the Post Office into a small business lender.

A spokesman for Bank of Scotland – now part of Lloyds – said there was an "increasingly competitive landscape" for banking services.

MSPs on the economy, energy and tourism committee will also assess the state of business lending in Scotland today when Dr Andrew Goudie, chief economic advisor to the First Minister, gives evidence in a separate Scottish Parliament inquiry.