Lloyds seeks new target

High street banking: Merged group starts looking for fresh acquisitions , while rival goes for fund manager

JOHN WILLCOCK

Financial Correspondent

Lloyds Bank and TSB unveiled details of their pounds 15bn merger yesterday, including pounds 350m of cost savings per year by 1997 - and immediatly started talking about the next possible acquisition.

Lloyds' shares soared 49p to 769p and TSB's shares closed 18p up at 368p as the City welcomed the banks' joint statement on projected cost savings. Some analysts suggested that the bank had implied that savings could potentially be even higher than forecast.

Lloyds and TSB hit out at speculation on job losses, urged unions to drop their opposition to the deal and reaffirmed the future of the branch network. They said they would keep TSB's merchant bank, Hill Samuel, and would allow TSB Scotland to remain registered in Edinburgh as a separate entity.

Sir Robin Ibbs, Lloyds' chairman and chairman-designate of the new bank, said it would "remain watchful" of further consolidation in the financial services sector. If a possible target added value and shared Lloyds' culture then "we would take it seriously".

The merged bank would generate surplus capital in a few years so it was not constrained by resources if a bid opportunity arose, said Sir Brian Pitman, Lloyds' chief executive. "The gaps between winners and losers is widening, not just in the UK but all over the world."

Sir Robin hit out at "alarmist figures" on job losses in the press while refusing to give any himself. "Clearly there will be a number of job reductions but the magnitude will depend on how the economy performs and the degree of success of this merger," he said. He said the vast majority of jub cuts would be by natural staff turnover, which currently stands at 6,000 a year for the combined bank. He said that by cutting out duplication there would be "one of everything" - one head office instead of two, one treasury operation, one branch technology system and so on.

Sir Robin said: "Any change can cause worries but in my experience people like to work for the winning team. The merger will be good for people all round and it will lead to better services and keener prices."

Although Lloyds will end up owning 70.4 per cent of the new bank following the merger, this did not mean Lloyds' operations would necessarily be chosen, he said. "It depends which is best."

Sir Robin also strongly defended windfall profits from share options that the TSB board members stand to make under the merger. He said that just because there had been a row about share options in the utilities, this should not "cast a shadow" across options as such. "There is an idea there is something disreputable about options but it is a recognised way of aligning the interests of shareholders with directors," he said.

"If the share price does well there is an opportunity for top management to participate. At the TSB there has been a remarkable improvement in profits over the last three years and the share price has reflected that. A share scheme should be used to reward the effort and skill involved."

Under the executive share option scheme, the TSB's chief executive, Peter Ellwood stands to make a paper profit of pounds 2m on his 838,893 share options, while TSB's chairman, Sir Nicholas Goodison, could make pounds 1.63m.

Sir Brian Pitman said the new bank would retain TSB's merchant bank, Hill Samuel, because of its fund management and private banking activities.

Sir Robin said the merger required an Act of Parliament which he hoped would go through "before the end of the year."

Bifu, the bank union, pledged yesterday to fight the merger, if necessary by challenging the move in Parliament. It believes up to 10,000 jobs and 500 branches are at risk.

Leif Mills, Bifu's general secretary, said: "It is already clear that thousands of jobs in head office departments, branches and subsidiary companies will go as a result of this merger.

"Just about the only people to benefit from this merger will be the top executives who will get a fat bounty for the destruction of the TSB, an historic bank that has traditional roots with working men and women and young people."

Start your day with The Independent, sign up for daily news emails
Life and Style
love + sex
Voices
A propaganda video shows Isis forces near Tikrit
voicesAdam Walker: The Koran has violent passages, but it also has others that explicitly tells us how to interpret them
News
people
Arts and Entertainment
Victoria Wood, Kayvan Novak, Alexa Chung, Chris Moyles
tvReview: No soggy bottoms, but plenty of other baking disasters on The Great Comic Relief Bake Off
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Graduate Application Support Analyst

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Reach Volunteering: External Finance Trustee Needed!

Voluntary post, reasonable expenses reimbursed: Reach Volunteering: Would you ...

Christine McCleave: FP&A Analyst

£36,000 - £40,000: Christine McCleave: Are you looking for a new opportunity a...

Recruitment Genius: Sales Executive - OTE £40,000

£15000 - £18000 per annum: Recruitment Genius: This is a great opportunity for...

Day In a Page

War with Isis: Iraq's government fights to win back Tikrit from militants - but then what?

Baghdad fights to win back Tikrit from Isis – but then what?

Patrick Cockburn reports from Kirkuk on a conflict which sectarianism has made intractable
Katarina Johnson-Thompson: Heptathlete ready to jump at first major title

Katarina Johnson-Thompson: Ready to jump at first major title

After her 2014 was ruined by injury, 21-year-old Briton is leading pentathlete going into this week’s European Indoors. Now she intends to turn form into gold
11 best gel eyeliners

Go bold this season: 11 best gel eyeliners

Use an ink pot eyeliner to go bold on the eyes with this season's feline flicked winged liner
Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

Climate change key in Syrian conflict

And it will trigger more war in future
How I outwitted the Gestapo

How I outwitted the Gestapo

My life as a Jew in wartime Berlin
The nation's favourite animal revealed

The nation's favourite animal revealed

Women like cuddly creatures whilst men like creepy-crawlies
Is this the way to get young people to vote?

Getting young people to vote

From #VOTESELFISH to Bite the Ballot
Poldark star Heida Reed: 'I don't think a single bodice gets ripped'

Poldark star Heida Reed

'I don't think a single bodice gets ripped'
The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Families clubbing together to build their own affordable accommodation

Do It Yourself approach to securing a new house

Community land trusts marking a new trend for taking the initiative away from developers
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all