Lloyds Banking Group is considering ending its funding of the Lloyds TSB Scotland foundation that distributes £6 million a year to Scottish charities, the head of the foundation has claimed.
The bank wants to cut the share of profits it distributes to four British foundations from 1 per cent to 0.5 per cent. Talks with the foundations covering England and Wales, Northern Ireland and the Channel Islands are said to be well advanced but those with the Scottish foundation are stalled.
Mary Craig, the Scottish foundation’s chief executive, said yesterday: “Lloyds Banking Group has indicated that it is considering whether to serve notice on Lloyds TSB Foundation for Scotland to terminate the covenant.”
The profit-sharing covenant, set up by the Trustee Savings Bank in 1985, was continued when Lloyds took over the TSB and £85 million has been distributed to Scottish charities. It can be ended by Lloyds giving notice to terminate the agreement in nine years; and if the bank is making a loss, which is expected this year, it is obliged only to donate £200,000, of which the Scottish share would be £39,000.
Ms Craig said the foundation’s trustees had rejected the bank’s plan to cut the profit-share. The trustees put forward an alternative plan involving a loan of £4 million a year and preserving the 1 per cent profit-share. She said that 1 per cent was rejected as “too much”.
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Lloyds said it had offered £7 million a year to cover the possibility of making no profits for the next four years in return for accepting the new deal, which was a “smaller slice of a bigger cake ... Our offer remains on the table and our door will remain open.”