Lloyds TSB is a leading UK-based financial services group, which was created in 1995 following the merger of the TSB Group and the Lloyds Bank Group. Its businesses provide a wide range of banking and financial services in the UK and overseas, principally through branches of the Lloyds TSB Bank and its wholly owned subsidiaries, Cheltenham & Gloucester and Lloyds TSB Scotland. In 2000, Lloyds TSB Group acquired Scottish Widows; this transaction positioned Lloyds TSB Group as one of the leading suppliers of long-term savings and protection products in the UK. During 2003 and 2004, Lloyds TSB Group disposed of a number of its overseas operations, as part of the process of managing its portfolio of businesses to focus on its core markets.

            Red = 25 day moving average.           Green = 200 day moving average.

May be as thick as a brick and am quite new to this game but why would the sp fall if it's benifical to lloyds to hold on to Scottish Widows ?

less likely there will be a takeover approach

Thanks MD must go set a stop loss.

Also the sp rose in anticpation os a return of capital had SW been sold, add to that the possibilty of a takeover and blimey if this had gone on we could have seen 7 in short order.

Obviously dont do anything rash, unless you want to lock in profit, as this has yet to be fully resolved imo.

If it does resolve as a no sell on SW then look to see around 5 again eventually, unless the City roll out another takeover rumour.

Thanks for the help SWW will keep stop loss in place and fingers crossed.

17 October 2006 - The Independent

Widows bid could bring out runners and riders for Lloyds - By Gary Parkinson


Eric Daniels, the American in the saddle at the Black Horse bank, could be forgiven for feeling a little sore.

Lloyds TSB - once the thoroughbred of British banking, but in past years more a candidate for the glue factory - has been quietly rediscovering the footpath leading towards the winners enclosure under his stewardship.

However. the country's fifth-biggest bank may be showing better form across the gallops, its lacklustre retail bank may be easing up along the rails, Lloyds TSB's shares may be now outperforming rivals across the sector, but the City and investors are constantly and frustrating diverted.

Instead of winning the plaudits they should for a steady (if unspectacular) turnaround, Lloyds and its management are plagued by takeover speculation.

A trio of the biggest American banks, a pair of Spanish lenders and a Dutch financial services group have all been touted as potential predators eyeing Lloyds over the past six months.

The City appears to turn a deaf ear as Mr Daniels et al chant the mantra that the bank is not for sale, that business is on the up, that Lloyds does not need a deal.

The fog of bid speculation engulfing the bank is unlikely to dissipate anytime soon, after it emerged that in the past fortnight Mr Daniels has knocked back yet another approach for Lloyds' life and pensions arm, Scottish Widows.

Swiss Re and Axa, the twin pillars of the European insurance establishment, are believed to have been behind the latest 8bn joint attempt to persuade Mr Daniels to cleave the Lloyds TSB group.

The French were interested in Widows' open operations, while Swiss Re wanted to pick up its closed life book.

Theirs was the latest of several unofficial approaches for Widows these past months. Resolution, among others, is believed to have expressed an interest in the business. All covet Widows' large closed with-profits funds, which are among the few remaining in the sector.

The bancassurance model fashioned by Mr Daniels' predecessor, Peter Ellwood, of selling life assurance products through Lloyds' 21,000 branches, is at last showing vital progress, six laboured years after conception.

Borrowing heavily from HBOS by importing a retail ascetic to high-street banking, Lloyds now offers fewer, simpler financial products in branches and over the telephone and internet.

In July, Lloyds unveiled impressive figures for the six months to the end of June. During that time, Widows' 596m of overall sales were 35 per cent higher than in the same time in 2005. At 210m, bancassurance sales were 64 per cent better. The profitability of new business increased to 28.8 per cent.

Assets under management grew by 11 per cent to 97bn, while Widows' embedded value - a key measure of value used by the life and pensions industry - stood at 5.5bn.

Ian Gordon, the banking analyst at Dresdner Kleinwort, said: "Strategically, now would be a strange time for Lloyds to look at selling Widows. It has come through six painful years, and appears to be turning the corner. It now has a product suite fit for purpose and sales are responding."

Mr Ellwood paid an inflated 7bn for Widows at the peak of the stock market in 1999, but his strategic ambitions were mired after the technology bubble burst only a year later.

Under Archie Kane, Scottish Widows is no longer the hospital patient it once was and is contributing solid profits to the group.

A strong pick-up in sales of Scottish Widows-branded savings and investment products, and continued growth in current accounts, is helping to offset slowing consumer lending.

Mr Daniels and latterly Sir Victor Blank, Lloyds new chairman, insist that Widows is integral to the group and one of its key drivers of growth.

Simon Maughan, a senior analyst at Blue Oak Capital, said: "It's taken six years, but the reason for buying Widows has eventually arrived. It would, therefore, be a surprising time to sell."

Not only is Widows a key driver of growth, but shedding the life and pensions business would have the unwelcome side-effect of make the remainder of the group more attractive and vulnerable to potential predators.

One banking sector expert said: "The feeling is that the Widows deal isn't going to happen, but that it's let the genie out of the bottle. We now know there is someone out there who will pay 8bn for Widows. If you are a clever investment banker, you know that even if Lloyds doesn't want to do a deal you can make a move on the whole group secure in the knowledge that you could sell on Widows."

Bank of America, Citigroup and JP Morgan, the Spanish lenders BBVA and Banco Santander, the owner of Abbey, and the Dutch financial services group ABN Amro have all been linked with Lloyds TSB this year.

Despite decent interim results, Lloyds still faces stiff challenges that lend it an appearance of vulnerability to takeover. A strong trading performance was watered down to only tolerable earnings growth by a rise in bad debts, not only in retail but also in business banking.

There are those within the City who still worry that Lloyds is corralled in strategic cul-de-sac. It has neither the high-growth emerging markets operations of Standard Chartered or HSBC, nor the American footprint of rivals such as Royal Bank of Scotland. Unlike Barclays, there is no booming investment banking business.

Lloyds' corporate bank is expanding nicely, but from a low base. The most pessimistic appraisals reckon it can only hope to grow to a fraction of the size of Barclays Capital or RBS's capital markets arm.

Competition for banking business is hotting up on the high street as rivals across the sector once again place greater store by branches.

HSBC is planning to open five "megastores", which it likens to the flagship stores of the computer group Apple. Meanwhile, HBOS and Abbey are planning their biggest branch expansions for decades.

In a sector where bid rumours appear more numerous than cash-machine withdrawals, the takeover speculation surrounding Lloyds is unlikely to disappear.

However, Lloyds is not a badly run company and the business rationale for its takeover by an American giant is not readily obvious.

Lloyds shares - 2p easier at 579p yesterday - stand higher than at any time since the end of 2002, valuing the bank at almost 32.6bn.

Mr Daniels is running a tighter ship, and has imported management that is winning plaudits. Truett Tate and Terri Dial are deepening Lloyds' American accent while orchestrating the burgeoning corporate bank and turnaround of the retail bank.

Mr Daniels has addressed the 2bn shortfall in the group's pension. He has moved to diversify Lloyds' earnings and ease its reliance on retail banking by bolstering its wholesale bank. Widows is doing nicely.

Thus the question is raised: what could the Americans running Citigroup, Bank of America or JP Morgan do differently to reinvigorate Lloyds that the Americans at its helm are not already doing?

Eric Daniels, the American in the saddle at the Black Horse bank, could be forgiven for feeling a little sore.

Lloyds TSB - once the thoroughbred of British banking, but in past years more a candidate for the glue factory - has been quietly rediscovering the footpath leading towards the winners enclosure under his stewardship.

However. the country's fifth-biggest bank may be showing better form across the gallops, its lacklustre retail bank may be easing up along the rails, Lloyds TSB's shares may be now outperforming rivals across the sector, but the City and investors are constantly and frustrating diverted.

Instead of winning the plaudits they should for a steady (if unspectacular) turnaround, Lloyds and its management are plagued by takeover speculation.

A trio of the biggest American banks, a pair of Spanish lenders and a Dutch financial services group have all been touted as potential predators eyeing Lloyds over the past six months.

The City appears to turn a deaf ear as Mr Daniels et al chant the mantra that the bank is not for sale, that business is on the up, that Lloyds does not need a deal.

The fog of bid speculation engulfing the bank is unlikely to dissipate anytime soon, after it emerged that in the past fortnight Mr Daniels has knocked back yet another approach for Lloyds' life and pensions arm, Scottish Widows.

Swiss Re and Axa, the twin pillars of the European insurance establishment, are believed to have been behind the latest 8bn joint attempt to persuade Mr Daniels to cleave the Lloyds TSB group.

The French were interested in Widows' open operations, while Swiss Re wanted to pick up its closed life book.

Theirs was the latest of several unofficial approaches for Widows these past months. Resolution, among others, is believed to have expressed an interest in the business. All covet Widows' large closed with-profits funds, which are among the few remaining in the sector.

The bancassurance model fashioned by Mr Daniels' predecessor, Peter Ellwood, of selling life assurance products through Lloyds' 21,000 branches, is at last showing vital progress, six laboured years after conception.

Borrowing heavily from HBOS by importing a retail ascetic to high-street banking, Lloyds now offers fewer, simpler financial products in branches and over the telephone and internet.

In July, Lloyds unveiled impressive figures for the six months to the end of June. During that time, Widows' 596m of overall sales were 35 per cent higher than in the same time in 2005. At 210m, bancassurance sales were 64 per cent better. The profitability of new business increased to 28.8 per cent.

Assets under management grew by 11 per cent to 97bn, while Widows' embedded value - a key measure of value used by the life and pensions industry - stood at 5.5bn.

Ian Gordon, the banking analyst at Dresdner Kleinwort, said: "Strategically, now would be a strange time for Lloyds to look at selling Widows. It has come through six painful years, and appears to be turning the corner. It now has a product suite fit for purpose and sales are responding."

Mr Ellwood paid an inflated 7bn for Widows at the peak of the stock market in 1999, but his strategic ambitions were mired after the technology bubble burst only a year later.

Under Archie Kane, Scottish Widows is no longer the hospital patient it once was and is contributing solid profits to the group.

A strong pick-up in sales of Scottish Widows-branded savings and investment products, and continued growth in current accounts, is helping to offset slowing consumer lending.

Mr Daniels and latterly Sir Victor Blank, Lloyds new chairman, insist that Widows is integral to the group and one of its key drivers of growth.

Simon Maughan, a senior analyst at Blue Oak Capital, said: "It's taken six years, but the reason for buying Widows has eventually arrived. It would, therefore, be a surprising time to sell."

Not only is Widows a key driver of growth, but shedding the life and pensions business would have the unwelcome side-effect of make the remainder of the group more attractive and vulnerable to potential predators.

One banking sector expert said: "The feeling is that the Widows deal isn't going to happen, but that it's let the genie out of the bottle. We now know there is someone out there who will pay 8bn for Widows. If you are a clever investment banker, you know that even if Lloyds doesn't want to do a deal you can make a move on the whole group secure in the knowledge that you could sell on Widows."

Bank of America, Citigroup and JP Morgan, the Spanish lenders BBVA and Banco Santander, the owner of Abbey, and the Dutch financial services group ABN Amro have all been linked with Lloyds TSB this year.

Despite decent interim results, Lloyds still faces stiff challenges that lend it an appearance of vulnerability to takeover. A strong trading performance was watered down to only tolerable earnings growth by a rise in bad debts, not only in retail but also in business banking.

There are those within the City who still worry that Lloyds is corralled in strategic cul-de-sac. It has neither the high-growth emerging markets operations of Standard Chartered or HSBC, nor the American footprint of rivals such as Royal Bank of Scotland. Unlike Barclays, there is no booming investment banking business.

Lloyds' corporate bank is expanding nicely, but from a low base. The most pessimistic appraisals reckon it can only hope to grow to a fraction of the size of Barclays Capital or RBS's capital markets arm.

Competition for banking business is hotting up on the high street as rivals across the sector once again place greater store by branches.

HSBC is planning to open five "megastores", which it likens to the flagship stores of the computer group Apple. Meanwhile, HBOS and Abbey are planning their biggest branch expansions for decades.

In a sector where bid rumours appear more numerous than cash-machine withdrawals, the takeover speculation surrounding Lloyds is unlikely to disappear.

However, Lloyds is not a badly run company and the business rationale for its takeover by an American giant is not readily obvious.

Lloyds shares - 2p easier at 579p yesterday - stand higher than at any time since the end of 2002, valuing the bank at almost 32.6bn.

Mr Daniels is running a tighter ship, and has imported management that is winning plaudits. Truett Tate and Terri Dial are deepening Lloyds' American accent while orchestrating the burgeoning corporate bank and turnaround of the retail bank.

Mr Daniels has addressed the 2bn shortfall in the group's pension. He has moved to diversify Lloyds' earnings and ease its reliance on retail banking by bolstering its wholesale bank. Widows is doing nicely.

Thus the question is raised: what could the Americans running Citigroup, Bank of America or JP Morgan do differently to reinvigorate Lloyds that the Americans at its helm are not already doing?

The Times - October 17, 2006

Stock markets - Struggling Cadbury falters as FTSE hits five-year high - By Nick Hasell


Speculation over the future of its Scottish Widows division dominated trading in Lloyds TSB, down 2p to 579p. Although Swiss Re and AXA, of France, have been touted as possible buyers of the life insurance operation, one intriguing theory is that Edinburghs Standard Life, up 4p to 286p, a post-float high, may be interested in pursuing a north of the border merger.

this is going to 520p soon,

Tanker

That's my thoughts too,.

Can't say I care too much as that's my previous buy in price, so I buy again and keep the profit intact from the last sell.

my self also.

Lloyds TSB dipped p to 568p as Chuck Prince, Citigroups chief executive, told analysts on the US banks third-quarter conference call that buying a big bank in Western Europe is not on my agenda. Mr Prince confessed to being bewildered about persistent rumours to the contrary, despite the fact he has been crystal clear on the point. Barclays dipped 1p to 715p.

http://business.timesonline.co.uk/article/0,,8211-2413017,00.html

http://business.guardian.co.uk/marketforces

do you mean 520 = -50p or 620 = +50p?
if there is a sharpish market correction soon, which is far from impossible, then 200 dma should provide support - currently 520 but rising

cynic, I am expecting a market correction as not everything goes up in a straight line.

Of course the lower the better, but I thought 520 as a base to buy., anything over and above 50p gain per share will do.

Of course these are all vaiables as outside influences can change our thoughts in respect of targets.

I do know, I would not buy between 5.50 and 6.

suggest keeping an eye on 200 dma .... as it is rising, 520 may be a bit optimistic for the bottom, if that is not an oxymoron (from the moron)

AFX - 20 October 2006

LONDON (AFX) - The UK's Office of Fair Trading said it plans to refer the market for payment protection insurance (PPI) to the anti-trust watchdog, arguing that a lack of competition between PPI providers results in poor value for consumers.

The move marks a setback for the UK banking industry, which generates large profits by selling payment protection policies, designed to keep up debt repayments if borrowers lose their income.

Unveiling the conclusions of a six-month study of the PPI industry, the OFT said there is 'little competitive pressure' in the market because consumers usually buy PPI from the same bank that is lending to them.

'Following the work we have undertaken it is clear that many consumers are failed by PPI - insurance which gives them a poor deal and often less protection than they think,' OFT chief executive John Fingleton said in a statement.

'There is limited evidence the industry is taking steps to improve the situation, but we believe they will not make major improvements to competition in the market,' he said.

The OFT is publishing its report today, and will hold consultations with banks and consumer organisations before reaching a final decision on whether to refer the PPI market to the Competition Commission early next year.

The Commission could ultimately impose price caps on PPI, making it less profitable for the banks.

According to the OFT, PPI generates revenues of about 5.5 bln stg for the leading UK banks every year.

Analysts say the banks that generate the most profit from PPI, and that have the most to lose from a clampdown on the sector, are Lloyds TSB Group PLC, HBOS PLC, Northern Rock PLC, and Barclays PLC.

The OFT launched its investigation in April in response to complaints from consumer groups that PPI is too expensive and is frequently mis-sold as a result of high pressure sales tactics.

Thanks cynic and dai.

The Business - 19/10/2006

Is the stable door closing on the Black Horse? - By : Helen Dunne & Ben Marlow


With predators moving in on its insurance arm, Scottish Widows, Lloyds TSB is facing an uncertain future as an independent bank.

It was only eight years ago that Lloyds TSB was the largest bank in the world by market value, led by the redoubtable Sir Brian Pitman, a chief executive feared and respected in equal measure and of whom it was said, only half jokingly, could turn Evian water into claret. Today those glory days are but a distant memory. Lloyds TSB languishes as the UKs fifth-largest banking group and outsiders struggle to remember the name of current chief executive Eric Daniels. It has been surpassed by HSBC, Barclays, Royal Bank of Scotland (which barely blipped on the radar screen in Sir Brians day) and HBOS, a powerhouse carved from a former building society (Halifax) and a regional player (Bank of Scotland).

The downturn in Lloyds TSBs fortunes can be dated back to its disastrous acquisition of life assurance group Scottish Widows for 7bn (E10.4bn, $13bn), completed in 2000. The highly leveraged purchase took place at the top of the equity cycle and as shares began to slump, so too did the value of Scottish Widows and the rationale for the deal. For five years, Scottish Widows business sucked in expensive capital, forcing the bank to sell off key overseas operations to fund growth. It also meant Lloyds was stuck with the deeply unfashionable bancassurance model, whereby banking and insurance services are sold together, further alienating investors. Finally, last year Scottish Widows paid its first dividend to the bank; but in the view of many in the City, it is a case of too little, too late and now the entire future of Lloyds TSB as an independent institution is being questioned.

Several serious buyers lurk in the wings to buy Scottish Widows. A tentative 8bn approach from Swiss Re and Axa has been discussed (and rejected) at board level, while other interested parties, such as Hugh Osmonds Pearl Group and Resolution Group, have indicated their willingness to get into a bidding battle for the closed funds. So far, the bank has spurned Scottish Widowss suitors; but many analysts believe that the time is right for Lloyds TSB to sell up and that new regulatory and accounting requirements make it the only sensible option.

Without Scottish Widows, Lloyds TSB should be no more vulnerable to overseas predators, such as Americas Citigroup or Spains Banco Hispano, than it currently is, as any buyers of the bank could easily sell Widows off. But the impact for Lloyds of a sell-off could nevertheless be damaging psychologically. Investors may begin to ask: what is the point of a small, independent British bank that tried and failed to go global and diversify?

Lloyds TSBs transformation from sleepy high street bank into a world-class leader but also the seeds of its subsequent downfall came under the stewardship of no-nonsense Pitman, who was appointed chief executive in 1983. Under Pitmans stewardship Lloyds TSBs market capitalisation increased 40-fold from 1bn to 40bn, and he delivered an annual compound total shareholder return, including reinvestment of dividends, of 26%. But, by the time Pitman retired in 2001, doubts about his record were already being expressed. His obsession with return on equity had been achieved at the expense of infrastructure investment, particularly in e-banking and internet facilities.

His successor, Peter Ellwood, presided over a time of static growth and minimal dynamism. After the Competition Commission blocked Lloydss proposed merger with Abbey, Ellwood held discussions with many merger partners, and regularly discussed the virtues of cross border transactions; but ultimately he failed to deliver. Within weeks of taking over, current chief executive Daniels, the son of a German father and Cantonese mother, admitted Lloyds TSB was accident prone as the bank was forced to pay 100m in fines and compensation for mis-selling risky precipice bonds to unsuspecting investors under the Scottish Widows brand.

The life insurance group initially became the focus of Daniels attention. Effectively, the Scottish Widows deal was a reverse takeover, explains Blue Oak Capitals Simon Maughan. The guys running it were given control of Lloyds TSBs insurance arm, told to develop some new savings and investment products and sell them through the branch network as well as the traditional IFA route which Scottish Widows preferred. Ultimately those developed were highly capital intensive, long dated products that were unsuited for the majority of Lloyds TSBs customers. Daniels ousted the Scottish Widows team, installing the banks director of group IT, Archie Kane, as executive director of Insurance and Investments in October 2003.

Borrowing heavily from HBOS by importing a retail ascetic to high street banking, Lloyds TSB now offers fewer, simpler products in the branches. Sales of Scottish Widowss branded products rose 35% in the first six months of this year. Paradoxically, therefore, Lloyds is finally beginning to make bancassurance work at the very time when it is having to consider whether to withdraw from the market.

Daniels ditched Ellwoods centralised approach in favour of a more collegiate culture, recruiting Terri Dial, known as the human cyclone, from Wells Fargo to oversee the retail operations. Wells Fargo is renowned for its ability to cross-sell products to customers, and Dial who is ranked 18th in our list of the top 30 most powerful women in the City is expected to import those techniques to try and make a success of bancassurance.

Dial has complained that getting things done within Lloyds TSB was initially like swimming in porridge; but as staff responded to the structure she introduced, it appeared as though someone had poured a jug of milk in. When I arrived, for one report we were asked to do, we got 55 pages of instructions, she recalls incredulously. The report wasnt even going to be 55 pages long.

But simplifying reporting lines, importing retailing techniques and offering better value products have been unable to offset the drain on resources that Scottish Widows has become. Lloyds TSB was forced to sell off its Brazilian subsidiary to HSBC for 815m, followed by operations in Paraguay a couple of years later and the disposal of its Argentina arm. More recently, operations in New Zealand were sold for 900m. The strategy has also left Lloyds TSB almost completely UK-centric in its focus, with 98% of its profits derived from its home market.

Two factors might now encourage the sale of Scottish Widows. The offer price of about 8bn is well above the groups embedded value of 5.5bn. Previous offers were always below the embedded value, which would have resulted in a capital deficit on sale that wouldnt have been tolerated by investors. A sale now would give Lloyds TSB cash to play with, especially given that 8bn is merely an opening offer.

But the regulatory changes, known as Basle II, that come into force on 1 January, will change the way financial subsidiaries are reflected in the balance sheet. Investments in financial subsidiaries were previously deducted from Tier 2 capital (comprising debt); from 1 January, they must be deducted in equal measure from Tier 2 and Tier 1 capital (comprising equity). Although the total capital ratio will remain unchanged, this will have the effect of lowering Lloyds TSBs Tier 1 capital which is viewed as a sign of strength by investors. Regulators require a minimal level. The Financial Services Authority has given Lloyds TSB five years to recapitalise the acquisition of Scottish Widows through retained earnings; but after 2012 the life assurance group will impact its balance sheet.

Even if traditional investors do not push management to change strategy and sell Scottish Widows, arbitrage firms, activist funds and hedge funds are likely to spoil Lloydss party, demanding either a sale of the insurance business or even a wholesale takeover. The banks pension fund deficit would be a barrier to the second option, albeit one which some believe could be circumvented; a greater one is the fact Lloyds TSB is now purely a British bank, which has made it less attractive to hostile bidders.

One thing is sure: the only way Lloyds TSB is likely not only to survive but also to thrive is if it sells Scottish Widows and uses the money to mount an aggressive expansion strategy. But the new world of global banking is tough and time is running out.