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February 22, 2012

Bank’s behaviour beggars belief

Lloyds TSB Foundation for Scotland has been a major funder of our sector over many years (£90m since 1985). In 2008, Lloyds Bank decided unilaterally to stop allocating a share of its profits to these charitable foundations.  A much reduced offer of funding was accepted by the other Foundations (England and Wales have their own) but not by Scotland who took the bank to court – and won. Except that the Bank (40% taxpayer owned) is now appealing and that could cost our sector £5m next year.


Third Force News

CHARITIES have this week called for banking giant Lloyds to drop a “shameful” legal bid aimed at avoiding paying over £5m to Scottish voluntary organisations.

Lloyds Banking Group this week announced it will appeal a Scottish Court of Session decision to award the Lloyds TSB Foundation for Scotland £5.25m the granting-giving body claims the bank owes it for 2009 and 2010.

However, Scottish charities this week said that the funds are vital to help boost charities in the current economy and urged the bank, which is 40 per cent owned by the taxpayer, to drop its appeal.

They highlighted that the sum is small in banking terms – Lloyds Banking Group chief executive Antonia Horta-Osorio waived his claim to a personal bonus of upto £5.4m in January – but very significant to community and voluntary groups in Scotland.

Anne Houston, chief executive of major children’s charity Children 1st, said: “The Lloyds TSB Foundation for Scotland has been a friend and supporter of Children 1st, along with other charities, for many years and its involvement is invaluable.

“It saddens and disappoints us that Lloyds TSB Foundation for Scotland’s vital work is threatened by the recent action of, and pressures being placed on it by, Lloyds Banking Group.”

The bank is legally bound to pay a proportion of its pre-tax profits to the Lloyds TSB Foundation.

However, following a major fall-out between the two in 2009, they have been arguing over the definition of pre-tax profits.

The bank argued it had no pre-tax profits in 2009, so paid the foundation just £38,920.

The foundation disputed this, arguing that the assets from the take-over the Halifax Bank of Scotland should be considered and so sued the bank for £3.5m.

In September 2011, Judge Lord Glennie ruled in favour of the bank. However, in December an appeal in front of three of Scotland’s most senior judges at the Edinburgh Court of Session ruled in favour of the foundation.

Earlier this week, the bank announced it is launching a fresh appeal, which will be heard at the UK’s Supreme Court in London.

The Lighthouse Foundation, a small Ayrshire-based organisation working with families affected by drug and alcohol problems, joined calls for it to reconsider.

Its project manager Kathleen Bryson said: “Lloyds Banking Group’s decision to appeal the decision of The Scottish Court of Session will have a devastating effect on many charities who like the Lighthouse Foundation depend on the foundation’s generosity.

“£5 million is not a large amount in banking terms but it is a lot of money when you consider the impact that this decision will have on disadvantaged families and children who reside in Scotland.”

The Lloyds TSB Foundation for Scotland’s chief executive Mary Craig this week asked why the bank was being allowed to waste time and money on legal action against a charity.

“Questions must now be asked as to why a major institution of its size, owned in part by the taxpayer, feels the need to pursue a charitable organisation in this way.”

She added: “Worse still, this shameful turn of events means that monies due to us will be held back for a third year until this further appeal is heard and decided – and that is money we should be awarding to Scotland’s hard-pressed charities, now and in the future, as they are crying out for support at this difficult time.”

A spokeswoman for Lloyds Banking Group said: “We can confirm that we have decided to appeal the Inner House decision and have filed our Notice of Appeal with the Supreme Court in London.

“Lloyds Banking Group is proud of its track record as one of the largest corporate funders in the UK, including Scotland.”