The Lloyds TSB Foundation for Scotland, which has funded thousands of charities across Scotland for decades, lost a court battle with Lloyds Banking Group over £3.5 million it claimed it was due from the bank.
Last year, the foundation, an independent grant-making trust which has received one per cent of the bank’s profits since 1985, won a ruling from the Court of Session in Edinburgh that it should receive the £3.5m in respect of LBG’s 2010 profits.
But the bank appealed to the Supreme Court in London, which has now dismissed the charity’s claim. Instead, the court ruled the foundation was entitled to just £38,920.
The news came as Lloyds announced 135 jobs were to be lost in Scotland under after a management restructure in the Bank of Scotland branch network.
They are among 940 jobs Lloyds is cutting as part of its strategic review which will see the taxpayer-backed lender lose 15,000 staff by 2014.
The Supreme Court ruling was branded a defeat for the country’s most vulnerable people.
Martin Sime, chief executive of the Scottish Council for Voluntary Organisations, said: “This is a sad day for charities in Scotland.
“The Supreme Court ruling in favour of the Lloyds Banking Group marks a victory for bankers and lawyers, while it is the vulnerable people across Scotland supported by the Lloyds foundation who will lose out at a time when need is rising in all of our communities.
“This news will taste bitter to many of the bank’s Scottish customers.”
The dispute centred over different ways of interpreting the accounts.
Mary Craig, chief executive of the foundation, said: “After over four years trying to resolve this situation, trustees are dismayed and bitterly disappointed by the decision by the Supreme Court, especially after the Scottish Appeal Court had ruled in our favour. Regrettably, there is no other appeal route open to us and, reluctantly, we must accept the decision.”
LBG gave notice in 2010 that it was terminating the 1985 covenant which gives the foundation its one per cent share of profits. The arrangement will come to an end in 2019, though the foundation says its work will continue.
Ms Craig said: “Trustees have been actively considering how best to secure long term funds for the foundation, irrespective of the outcome of this court action. With the uncertainty caused by this dispute now behind us, we will be able to turn our full attention to detailed planning for the future.”
Only in November, the foundation invited local charities to discuss funding applications.