Lloyds TSB Suffers £3.4 Billion Loss Amid Record Profits and Staff Cuts

SIR BRIAN PITMAN, the Lloyds TSB chairman, has suffered a significant setback after seeing £3.4 billion wiped off the value of the bank due to record profits and a new internet strategy. The bank's share price plummeted 9% despite unveiling a 16% rise in pre-tax profits to £3.85 billion. As a result, Lloyds TSB plans to cut 3,000 jobs and reduce its efficiency ratio to below 35% by 2002. The pledge comes as National Westminster Bank (NatWest) has finally surrendered to the £20.4 billion hostile bid from the Royal Bank of Scotland (RBS), led by Sir David Rowland and Ron Sandler.

Key Takeaways:

• Lloyds TSB's share price fell 9% after £3.4 billion was wiped off the bank's value despite record profits of £3.85 billion.
• The bank plans to cut 3,000 jobs as part of its efforts to reduce its efficiency ratio to below 35% by 2002.
• RBS is expected to cut 18,000 jobs over three years at NatWest, with Sir David Rowland and Ron Sandler likely to leave the company.
• The bank will take a charge of £200m to cover restructuring this year.
• The NatWest board has been bracing for more big job-cut announcements as the big banks, including Barclays, Halifax, Abbey National, and Alliance & Leicester, prepare to report their 1999 annual results.
• Lloyds TSB will launch an internet bank on the Continent, starting with Spain later this year.

Statistics:

• £3.4 billion: Value wiped off Lloyds TSB's share price.
• £3.85 billion: Lloyds TSB's pre-tax profits.
• 16%: Rise in pre-tax profits.
• 9%: Fall in Lloyds TSB's share price.
• £20.4 billion: RBS's hostile bid for NatWest.
• 3,000: Number of jobs to be cut by Lloyds TSB.
• 35%: Target efficiency ratio for Lloyds TSB by 2002.
• 18,000: Number of jobs to be cut by RBS at NatWest over three years.
• £200m: Charge for restructuring by Lloyds TSB this year.

Sources:

• Financial Times (exact date not provided)
• "City warriors ursue NatWest shares" by an unnamed author.