Lloyds told to stop 'human chess' with Scottish executives

Published on Monday 23 November 2009 21:58

A MANAGEMENT shake-up of Lloyds Banking Group could lead to the Bank of Scotland being run from London, a leading politician warned last night.

Top banker Susan Rice stepped down from her twin role as chairman and chief executive of Lloyds TSB Scotland last week in a move business leaders described as a "major blow" to Scotland's banking sector.

Lady Rice remains as managing director of Lloyds Banking Group in Scotland, with responsibility for the Bank of Scotland and Scottish Widows.

But she reports directly to Archie Kane, the Lloyds executive board member responsible for Scotland.

There were fears last night that responsibility for the Bank of Scotland, the nation's oldest bank, is slowly ebbing away to the London-based executive board of Lloyds Banking Group.

Labour MSP George Foulkes said last night: "I would call on Lloyds to stop playing human chess with their senior executives in Scotland in the way they are doing now. My fear is that the Bank of Scotland will slowly be integrated into the Lloyds structure. There seems to be a move to put more and more power at the centre.

"It is my opinion that Lloyds should now divest themselves of the Bank of Scotland in order that the bank can retain its own structure and keep day-to-day running of the bank here in Scotland."

Lloyds Banking Group has announced a new management structure, which sees two senior operatives moving in to take charge of Lloyds TSB in Scotland. Lady Rice will be replaced as chairman of Lloyds TSB Scotland by Mark Fisher, Lloyds Banking Group director of operations.

Peter Navin, director of Lloyds TSB Scotland's branch network, becomes chief executive. The roles of Governor and Treasurer of the Bank of Scotland, whose names appear on banknotes, remain with Lloyds executives.

The Governor is Lloyds chief executive Eric Daniels, while the Treasurer is group executive director Mr Kemp.

The revamp comes after it was confirmed that the Scottish branches of Lloyds TSB are to be sold off, along with about 300 bank branches in England, to satisfy EU competition rules.

Lloyds Banking Group (LBG) insisted last night that the changes were part of a planned restructuring of the business.

A Lloyds spokesman said: "The changes we have made reflect the need to support Lloyds TSB Scotland throughout the integration of certain operations as a result of the HBOS acquisition and the planned disposal of the business as part of the previously announced state aid restructuring plan, which was formally approved by the European Commission last week."

Lady Rice denied that she has been sidelined, claiming she now has a much larger role within the Lloyds group. She said: "I was absolutely delighted last December when I was asked to take on a much larger role as managing director of Lloyds Banking Group Scotland." The Bank of Scotland lost much of its independence in a merger with the Halifax in 2001, when it became HBOS.

The bank's independence was further eroded in January this year when Lloyds Banking Group took over HBOS.