Lloyds seeks new target

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


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."

Alan Bennett criticised the lack of fairness in British society encapsulated by the private school system
peopleBut he does like Stewart Lee
David Moyes and Louis van Gaal
Arts and Entertainment
Sheridan Smith as Cilla Black and Ed Stoppard as her manager Brian Epstein
tvCilla Episode 2 review: Grit under the glamour in part two of biopic series starring Sheridan Smith
Life and Style
Alan Turing, who was convicted of gross indecency in 1952, was granted a royal pardon last year
Life and Style
Arts and Entertainment
Tennis player Andy Murray's mum Judy has been paired with Anton du Beke for Strictly Come Dancing. 'I'm absolutely delighted,' she said.
tvJudy Murray 'struggling' to let Anton Du Beke take control on Strictly
Life and Style
Vote with your wallet: the app can help shoppers feel more informed about items on sale
lifeNew app reveals political leanings of food companies
Arts and Entertainment
The cover of Dark Side of the Moon
musicCan 'The Endless River' carry on the tradition? See for yourself
New Zealand fly-half Aaron Cruden pictured in The Zookeeper's Son on a late-night drinking session
Arts and Entertainment
Worldwide ticket sales for The Lion King musical surpassed $6.2bn ($3.8bn) this summer
tvMusical is biggest grossing show or film in history
A new app has been launched that enables people to have a cuddle from a stranger
voicesMaybe the new app will make it more normal to reach out to strangers
Arts and Entertainment
Salmond told a Scottish television chat show in 2001that he would also sit in front of a mirror and say things like,
tvCelebrity Trekkies from Alex Salmond to Barack Obama
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
food + drink
Rob Merrick's Lobby Journalists were playing Ed Balls' Labour Party MPs. The match is an annual event which takes place ahead of the opening of the party conference
newsRob Merrick insistes 'Ed will be hurting much more than me'
A cabin crew member photographed the devastation after one flight
Life and Style
Carol O'Brien, whose son Rob suffered many years of depression
healthOne mother's story of how London charity Maytree helped her son with his depression
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

Trainee / Experienced Recruitment Consultants

£20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...

Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Quantitative Risk Manager

Up to £80000: Saxton Leigh: My client, a large commodities broker, is looking ...

Day In a Page

Secret politics of the weekly shop

The politics of the weekly shop

New app reveals political leanings of food companies
Beam me up, Scottie!

Beam me up, Scottie!

Celebrity Trekkies from Alex Salmond to Barack Obama
Beware Wet Paint: The ICA's latest ambitious exhibition

Beware Wet Paint

The ICA's latest ambitious exhibition
Pink Floyd have produced some of rock's greatest ever album covers

Pink Floyd have produced some of rock's greatest ever album covers

Can 'The Endless River' carry on the tradition?
Sanctuary for the suicidal

Sanctuary for the suicidal

One mother's story of how London charity Maytree helped her son with his depression
A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits