Lloyds TSB, the high street banking giant, yesterday warned the City it would take more than a year for it to get out of the doldrums and start to deliver significantly better growth and profits.
Eric Daniels, who stepped up into the chief executive's job at Lloyds in May, said the bank had been "accident prone", driven by a desire for top-line sales growth irrespective of how profitable the business being taken on was. This strategy had also landed Lloyds in serious trouble with the UK's financial regulators, Mr Daniels and other senior managers admitted at a crucial meeting with analysts. The Financial Services Authority slapped a £1.9m fine on Lloyds two weeks ago for the way it sold so-called "precipice bonds".
Attempting to use the briefing to convince the City his leadership marks a new dawn at Lloyds, Mr Daniels said: "Our last three years' base earnings have been static while the market has grown and others have grown within it."
He added that investors would not see an improvement in performance until the second half of 2004 and "we will pick up momentum during 2005".
A major part of that momentum would be by executing a five-year recovery plan for Scottish Widows, the savings and investment business Lloyds bought in 1999. Mr Daniels triggered speculation that he was about to sell Scottish Widows after plunging stock markets weakened the business and because it has failed to deliver strong sales through Lloyds' branches.
However, yesterday Archie Kane, who took over the top job at the Edinburgh-based business two weeks ago, said the bank was committed to keeping the division."This market is set to grow faster than any other market in financial services," Mr Kane said.
The plan for Scottish Widows involves diversifying its offering to take account of changes currently underway which will see a range of price-capped basic products come onto the market and also which will shake up the way investments are distributed under the "depolarisation" reforms.
Mr Kane said some 600 underperforming employees of Scottish Widows have been made redundant, leaving it with a workforce of 1,100. Of those, some will be trained to advise more wealthy customers on relatively complex products. A separate group will concentrate on advising on simpler products, while customers with little disposable income would be able to buy straightforward products with negligible or no advice. Lloyds' shares fell 8.25p to 436p.Reuse content