May 11, 2010
If we own this bank, why won’t it do our bidding?
Thousands of small charities and communities have benefited over the years from the financial support of Lloyds TSB Foundation for Scotland. £85 million has been distributed. It is one of the very few charitable funders that will pay for core costs and staffing. The bank has chosen to renege on its obligation to covenant a share of its profits to the Foundation. They just shouldn’t be allowed to get away with it
A pioneering model……
200 years ago in the poor parish of Ruthwell, Dumfriesshire, the local minister Rev Henry Duncan, set about the task of alleviating poverty, setting up the first savings bank.
This allowed people to pay small sums into an account and gradually build up savings. The people’s bank became a lifeline for many communities. It wasn’t in business to rip people off, but rather had a social conscience. Henry Duncan’s pioneering model was soon imitated in almost 100 countries. Out of this idealism, the Trustee Savings Bank grew.
Fast forward to 1985. The Trustees Savings Bank was floated on the stock market. As a way of compensating savers for the loss of their bank, four independent charitable foundations were established, including the Foundation in Scotland, and given shares. Rather than receive dividends, each had its own covenant set up in order to distribute 1% of pre-tax profits back to local communities. Each of the four Foundations has a separate agreement with the Bank and although terms and conditions are similar, the share of the 1% pre-tax profit they receive is different. The Foundation in Scotland receives almost 20% of the monies that come from this arrangement.
In 1995, when the TSB Group and Lloyds Bank merged, Lloyds committed itself to supporting the work of the charitable foundations and continued to give 1% of pre-tax profits as set out in the covenant. Lloyds is not a donor to the Foundation nor is payment to the Foundation a benevolent, voluntary act. Funds are the Foundation’s by right of shareholding and the Group pays in line with their legal obligation.
To date, the Lloyds TSB Foundation for Scotland has received over £82 million from the Lloyds Banking Group and distributed around £85 million. This has been a huge investment in community projects throughout Scotland.
Then the recession hit……and after lengthy negotiations Lloyds TSB have chosen to terminate the historic covenant with the Foundation.
The Foundation is now in a nine year notice period, after which the connection with Lloyds Banking Group and the legacy of the Trustee Savings Bank will be severed.
In the meantime, the lack of funds from the share of pre-tax profits means that the Foundation has been forced to sell some of its shares in the bank in order to continue its grant making. In April 2010 the Foundation announced that the funding stream made possible by the sale of these shares is to be named after Henry Duncan, the founder of the TSB.
Save the Foundation
Charities and community groups from across Scotland have joined forces to save the Lloyds TSB Foundation for Scotland. The charitable foundation is facing an uncertain future after Lloyds Banking Group ended the agreement that guarantees its share of the Bank’s pre-tax profits.
Launched on 6th May 2010, the campaign has one aim:
To push Lloyds Banking Group to reverse their decision to terminate the existing covenant with the Lloyds TSB Foundation for Scotland.
This is a people’s petition, which represents the grassroots nature of the campaign. This campaign is about the communities and individuals across Scotland who will lose out on services and support if Lloyds Banking Group fails to reinstate the existing covenant with the Foundation.
At the request of its members, the Scottish Council for Voluntary Organisations has agreed to act as a facilitator for the campaign.