Lloyds TSB weighs Scottish Widows sale

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The Independent Online

Lloyds TSB yesterday confirmed that its new chief executive, Eric Daniels, was examining the performance of the bank's life insurance arm, Scottish Widows, as part of a wide-ranging review of the business which might lead to some disposals.

Having taken over the mantle of chief executive of the high street bank in June, Mr Daniels has put its New Zealand assets on the block and, City analysts believe, is looking to sell Lloyds' interests in Latin America.

Mr Daniels, who headed the retail bank before succeeding Peter Ellwood as chief executive, has signalled a number of times that he believes Lloyds can steal a march on rivals by focusing on its core savings and lending offering, by sprucing up the branch network and improving customer service.

Mr Daniels was yesterday reported as saying: "Scottish Widows is a business where we believe we can meet hurdles, and if you can make a good return on capital then it's a good business." But he added: "If we can't build competitive advantage, we need to scratch our heads and have a rethink."

Lloyds paid £7bn for Scottish Widows in 1999, transforming the group overnight into one of the UK's largest providers of life insurance. The deal was intended to be a strategic coup, boosting profits by providing a way of cost-effectively marketing insurance and investment products to banking customers.

Lloyds has one of the highest cross-selling records in the ban king sector. However, owning a life insurer during a period of severe depression on the stock market has knocked Lloyds' shares compared with rivals, and has been a drag on its capital.

There has been speculation in recent weeks that Mike Ross, chief executive of Scottish Widows, was about to leave the business. Mr Ross has denied this and yesterday a spokesperson said the rumour was "nonsense". Lloyds announces half-year results on 1 August.

Fox-Pitt Kelton said Mr Daniel's comments suggested his vision for the bank would be to "maximise service and sales from the branch network with current initiatives including renovating branches and replacing a third of ATMs by the end of the year".