Lloyds TSB chairman hits out over foreign takeovers

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The Independent Online

The Chairman of Lloyds TSB yesterday hit out at the Government's willingness to allow foreign banks to buy rivals in the UK when it has signalled that it would block all major mergers between British lenders.

The Chairman of Lloyds TSB yesterday hit out at the Government's willingness to allow foreign banks to buy rivals in the UK when it has signalled that it would block all major mergers between British lenders.

Maarten van den Bergh also complained that the playing field was skewed because, in contrast to the British government's relaxed attitude to foreign takeovers, foreign admin- istrations would not allow Lloyds or its rivals to snap up one of their major banks.

He was speaking after Lloyds TSB, Britain's fifth-biggest bank by assets, reported first-half pre-tax profits down 7 per cent to £1.5bn. Pre-tax profits from continuing operations rose 12 per cent to £1.6bn.

Eric Daniels, the chief executive of Lloyds, said the bank was on track for improved performance later in 2004 and that sales from insurance and investments and retail banking picked up as the first half went along.

Mr van den Bergh's swipe at the Government comes after Santander Central Hispano, Spain's largest bank, had its £8.2bn bid for Abbey National recommended by the UK mortgage lender's board on Monday.

Lloyds - whose attempt to buy Abbey in 2001 was blocked by the Competition Commission - said it thought it would be very difficult for a UK bank to compete with Santander's offer, even though many analysts see the price as being ungenerous.

"If a British bank went into France or Germany it would be blocked. Are we all going to be happy if in five to 10 years' time the British banking scene is dominated by foreign banks?" Mr van den Bergh asked.

He praised the "liberal economic view" of the UK government, which had facilitated strong growth by businesses. But he said: "The idea of national champions is not alive in this country." The Treasury has told UK banks that it will treat foreign bids in their sector on the same grounds as it looks at deals within national borders.

UK banks feel frustrated about this position as they believe they are unable to realise hundreds of millions of pounds of cost savings and revenue benefits they would gain through domestic consolidation.

The Competition Commission ruled against Lloyds, on the grounds that if it had bought Abbey, it would have ended up with too large a share of the current account market for personal and business customers.

Mr Daniels said of a possible rival bid for Abbey: "No large UK institution will get through the Competition Commission without a referral, and the chance of the referral being approved is slim." His pessimism follows similar caution from James Crosby, the chief executive of HBOS, this week.

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