LLOYDS TSB is holding urgent talks with the trustees of its final-salary pension schemes in an attempt to reduce its £3 billion deficit, The Times has learnt.
The bank is thought to have hired Goldman Sachs, the Wall Street investment bank, to draw up options for its two final-salary pension schemes, which have 60,000 to 70,000 members.
Lloyds TSB, Britain’s fifth- biggest bank, has come under increasing pressure to produce long-term plans to reduce or eradicate its deficit after its rivals HSBC, HBOS, Royal Bank of Scotland and Northern Rock announced plans for substantial cash injections to their closed final-salary schemes. Banking analysts claim that Lloyds TSB, unlike its rivals, has limited scope for making a large immediate payment to its pension scheme, so must consider different options. The bank is also not in a position to cut its deficit by altering or reducing benefits to members.
A court challenge nearly ten years ago to the benefits paid out under the Lloyds pension scheme failed, leaving its members with a cast-iron guarantee.
A Lloyds TSB in-house union source said that the former TSB scheme appeared to have the same kind of cast-iron guarantees. The union is to update members about the pension deficit shortly. The bank could, through buying a derivatives contract, cut the risk that the deficit will grow.
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A senior banking source said that Lloyds TSB was under pressure to address its pension fund deficit after moves by two of its rivals to reduce deficits in their funds. In December HSBC halved its deficit with a £1 billion cash injection, the largest single payment made by a UK company into a fund. Weeks earlier, HBOS promised to eliminate its deficit within ten years and made an initial contribution of £800 million.