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The Times: Investors hope GUS boss can spur Lloyds TSB

By Caroline Merrell, Banking Correspondent
SIR VICTOR BLANK’S expected arrival to the chairmanship of Lloyds TSB in May will help to improve the profile of the bank among City investors, sources said yesterday.
Despite turning around Scottish Widows, its life insurance subsidiary, and growing profits from corporate banking, the bank’s share price has failed to reflect recovery with investors holding the shares for the generous dividend.
It is thought that Sir Victor will devote most of his time to Lloyds once the demerger of GUS — where he is also chairman — is complete. After the split, Lloyds is expected to be his only FTSE 100 chairmanship. His arrival could hasten the sale of the funds management division of Scottish Widows, sources said yesterday.
The bank has been in the midst of turning round Scottish Widows, which it bought for more than £7 billion at the top of the market. However, despite the fact that the insurer paid a dividend to Lloyds for the first time last year, advisers claim that it still could be sold or merged with another asset management division.
The bank recently held talks with Fortis, the Dutch bank, about creating a joint venture in investment management. The talks are believed to have stalled but, according to some banks, a complete sale could be on the agenda.
Yesterday shareholders in Lloyds gave a cautious welcome to Sir Victor who is succeeding Maarten van den Bergh, who has been head of the bank since 2000. One top-ten shareholder said: “We are viewing it as a net positive. We have not met him, but he does seem to be the sort of person who could be better than the present chairman.” Mr van den Bergh, who was at Royal Dutch Shell, was hired to carry out a cross-border banking deal. The deal eluded the bank as it struggled with Scottish Widows and was forced to address a number of mis-selling problems.
Another shareholder said: “It is hard to form a view until we meet him, but he has done some good things at GUS.” Sir Victor was chairman of Charterhouse, the investment bank, as well as a director Royal Bank of Scotland, a rival to Lloyds.
One analyst said that his negotiating skills would be useful if the British bank eventually fell to either an American bank — such as Bank of America or Citigroup — or to BBVA, the Spanish bank that is on the acquisition trail.
The arrival of a new chairman could lead to a review of the bank’s dividend policy — the stock yields 7 per cent, which makes it popular with funds that invest to produce income. The bank has maintained the dividend despite a dip in profits five years ago.
A banker who has worked closely with Sir Victor said: “He is a very tough operator. One thing is for sure, he is unlikely to sit around and do nothing.”
Analysts pointed out that Eric Daniels, chief executive, has made considerable headway in turning round Lloyds TSB’s fortunes, but this had not yet been reflected in the share price performance. One said: “He may be able to sell the Lloyds TSB message more fully to investors.”
The bank recently hired Terri Dial, an American banker and veteran of Wells Fargo, to run its retail division. Ms Dial has been bought in to raise service standards at the bank which has been struggling to compete with HBOS in the UK.
BLANK THE DEALMAKER
1971: co-author of Weinberg and Blank on Takeovers and Mergers

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