Lloyds Bank

Lloyds Bank

Lloyds Bank plc is a retail and commercial bank in the United Kingdom. It is considered one of the “Big Four” clearing banks. Lloyds Bank is the largest retail bank in the UK. It’s network of branches and ATMs in England and Wales are extensive, and they also offer 24-hour telephone and online banking services. Lloyds Bank made arrangements for its customers with the Bank of Scotland branches in Scotland to receive services on their accounts. A similar arrangement was made with Halifax branches in Northern Ireland.

Lloyds Bank maintains its Headquarters in London, with other offices located in Wales and Scotland. Additional properties include brand headquarters and data centers in Yorkshire including Leeds, Sheffield and Halifax.

 

History

Origins

Button maker John Taylor, and iron producer Sampson Lloyd II set up a private banking business in Dale End, Birmingham in the year 1765. The beehive was selected as the symbol of the Taylors and Lloyds because it represented hard work and industry.

Lloyds & Co. was renamed Lloyds Banking Company Ltd. when it converted into a joint-stock company in 1865. The black horse standard dates to 1677 replaced the beehive later when Lloyds took over Barnett, Hoares & Co. in 1884

 

Expansion

Lloyds developed into one of the “Big Four” clearing banks in the United Kingdom through around 50 mergers between 1900 and 1923.

An attempted merger in 1968 with Barclays and Martins Bank was deemed to be against the public interest by the Monopolies and Mergers Commission.

Lloyds Bank helped found the Joint Credit Card Company in 1972 (with NatWest Bank, Midland Bank and the National and Commercial Banking Group). The company launched the Access credit card, which is now known as MasterCard.

1972 also saw the introduction of ‘Cashpoint’, the first cash machine to use plastic cards with a magnetic strip.

 

Lloyds TSB

Lloyds merged with Cheltenham & Gloucester Building Society (C&G) and then with the TSB Group in 1995. The C&G acquisition earned Lloyds a large stake in the UK mortgage lending market.

The TSB merger was designed as a reverse takeover with Lloyds Bank Plc being delisted from the London Stock Exchange and TSB Group plc being renamed Lloyds TSB Group plc on 28 December. The new bank began trading in early1999, after the statutory process of integration was completed.

On June 28, 1999, TSB Bank plc transferred operations to Lloyds Bank Plc, changing its name to Lloyds TSB Bank plc. TSB Bank Scotland plc took on the three Scottish branches of Lloyds, becoming Lloyds TSB Scotland plc. The businesses combined  to form the largest bank in the United Kingdom according to market share. It also became the second-largest according to market capitalization behind Midland Bank (now HSBC).

Lloyds’ black horse logo was retained, but it was modified slightly to reflect the TSB merger.

 

Services

Lloyds bank provides the full range of banking services. It has a network of 1,300 physical branches throughout the UK and Wales.Branches located in Jersey, Guernsey and the Isle of Man are operated by Lloyds Bank International Limited. Lloyds Bank Limited (Gibraltar) operates in Gibraltar.

Both Lloyds Bank International Limited, and Lloyds Bank Limited (Gibraltar) are wholly owned subsidiaries and operate under the Lloyds Bank brand.

Lloyds Bank is granted authority by the Prudential Regulation Authority. The bank is also regulated by both the FCA and the PRA.

Lloyds Bank is a member of the Financial Ombudsman Service, the Financial Services Compensation Scheme, UK Payments Administration, the British Bankers’ Association and adheres to the Lending Code.

The Lloyds Bank Foundation funds local, regional and national charities working to eliminate disadvantage across the United Kingdom. Scotland, Northern Ireland and the Channel Islands have separate foundations.

 

Overseas operations

Lloyds began and expansion into international banking starting in 1911. It had banking offices in 45 countries by 1985, including Argentina and the US. Lloyds Bank International operations were moved into the main business system of Lloyds Bank in 1986.

Lloyds Bank International has been the name used to refer to the bank’s offshore banking operations since 2010,

 

Controversies

Payment protection insurance

A 2005 investigation by the Financial Services Authority (FSA) found that there was a lack of compliance controls related to payment protection insurance (PPI). Another investigation followed in 2006 which found further evidence of poor compliance. Major PPI providers, including Lloyds, received fines for the unfair treatment of customers. This problem persisted and in 2001 a High Court case went against the offending banks. Lloyds set aside £3.6 billion to compensate customers.

Lloyds was found out to be reducing the compensation to customers in 2014. They were using a regulatory provision named “alternative redress”, which assumes that customers sold one policy would have bought a cheaper policy, thus reducing how much the bank would have to pay out.

Lloyds Banking Group was fined £117 million in June 2015 for incidents of mishandling payment protection insurance claims. Many claims were being “unfairly rejected”.

 

Tax evasion

Lloyds TSB Offshore in Jersey, Channel Islands was encouraging wealthy customers to evade tax according to allegations raised by the BBC’s Panorama in 2009. BBC filmed an employee of Lloyds who told a customer how they could use one of several methods to make transactions ‘invisible’ to the UK tax authorities. Also of concern is that this action breaks money laundering regulations.

Lloyds launched an internal investigation and claimed that this was an isolated incident.

 

Retail conduct failings

The Financial Conduct Authority fined Lloyds Banking Group £28 million in 2013 for “serious failings” in relation to bonus programs for its sales staff. It was the largest fine that the FCA had imposed for improper retail conduct. The bonus program pressured staff to hit sales targets at the risk of demotion or pay cuts. Lloyds Bank accepted responsibility and apologized to customers.

 

Libor rate manipulations

Regulators from both the UK and US imposed fines in July 2014. The combined amount of the fines were approximately £218 million ($370 million). These were the result of the global Libor rate fixing scandal, as well as other rate manipulations and filing of false reports.