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Bank of Scotland Plc (63GF)

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Friday 24 February, 2012

Bank of Scotland Plc

Final Results

RNS Number : 0989Y
Bank of Scotland Plc
24 February 2012
 



 

Bank of Scotland plc

Results Announcement

 

For the year ended 31 December 2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Member of the Lloyds Banking Group

 



 

FORWARD LOOKING STATEMENTS

 

This announcement contains forward looking statements with respect to the business, strategy and plans of Bank of Scotland plc, its current goals and expectations relating to its future financial condition and performance.  Statements that are not historical facts, including statements about the Bank of Scotland Group or the Bank of Scotland Group's management's beliefs and expectations, are forward looking statements.  By their nature, forward looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future.  The Bank of Scotland Group's actual future business, strategy, plans and/or results may differ materially from those expressed or implied in these forward looking statements as a result of a variety of risks, uncertainties and other factors, including, without limitation, UK domestic and global economic and business conditions; the ability to derive cost savings and other benefits, including, without limitation, as a result of the integration of the HBOS Group into the Lloyds Banking Group and the Lloyds Banking Group's simplification programme; the ability to access sufficient funding to meet the Bank of Scotland Group's liquidity needs; changes to Bank of Scotland plc's, HBOS plc's, Lloyds TSB Bank plc's or the Lloyds Banking Group plc's credit ratings; risks concerning borrower or counterparty credit quality; instability in the global financial markets; changing demographic and market related trends; changes in customer preferences; changes to regulation, including Eurozone instability, accounting standards or taxation, including changes to regulatory capital or liquidity requirements; the policies and actions of governmental or regulatory authorities in the UK, the European Union, or jurisdictions outside the UK, including other European countries and the US; the ability to attract and retain senior management and other employees; requirements or limitations imposed on the Bank of Scotland Group, the HBOS plc Group, the Lloyds TSB Bank plc Group as a result of HM Treasury's investment in Lloyds Banking Group plc; the ability to complete satisfactorily the disposal of certain assets as part of the Lloyds Banking Group's EU state aid obligations; the extent of any future impairment charges or write-downs caused by depressed asset valuations; exposure to regulatory scrutiny, legal proceedings or complaints, actions of competitors and other factors.  Please refer to Lloyds Banking Group plc's latest Annual Report on Form 20-F filed with the US Securities and Exchange Commission for a discussion of certain factors together with examples of forward looking statements.  The forward looking statements contained in this announcement are made as at the date of this announcement, and the Bank of Scotland Group undertakes no obligation to update any of its forward looking statements.

 

 

CONTENTS

 


Page 

Financial review

Principal risks and uncertainties

Primary statements


Consolidated income statement

13 

Consolidated statement of comprehensive income

14 

Consolidated balance sheet

15 

Consolidated statement of changes in equity

17 

Consolidated cash flow statement

19 

Notes

20 

Contacts

40 

 


FINANCIAL REVIEW

 

Principal activities

Bank of Scotland plc (the Bank) and its subsidiaries (together, the Group) provide a wide range of banking and financial services in the UK and overseas.

 

During 2011, the Group earned revenue through interest and fees on a broad range of financial services products including current and savings accounts, personal loans, credit cards and mortgages within the retail market; loans and capital market products to commercial, corporate and asset finance customers; and private banking.

 

Review of results

The Group's loss before tax decreased by £410 million, or 11 per cent, to £3,461 million for 2011 from £3,871 million in 2010.

 

The trading surplus decreased by £3,527 million, or 49 per cent, from £7,143 million to £3,616 million, comprising a £968 million decrease in net interest income, a £2,743 million decrease in other income and a £184 million reduction in operating expenses.

 

Net interest income was £968 million, or 11 per cent, lower at £7,857 million for 2011, compared to £8,825 million for 2010, principally due to a reduction in margins as a result of increased funding costs.

 

Other income declined by £2,743 million from £3,480 million in 2010 to £737 million in 2011, as a result of reduced net trading income as a result of unfavourable market conditions, the non-repetition of liability management gains of £433 million arising in 2010 and a decrease in operating lease income following reductions in operating lease assets.

 

Total operating expenses decreased to £4,978 million in 2011, compared to £5,162 million in 2010.  The decrease reflects integration savings, the non-recurrence of a provision of £500 million for customer goodwill payments in 2010 and lower depreciation and amortisation charges, largely as a result of reductions in operating lease assets, offset by a £1,155 million charge in respect of payment protection insurance in 2011.

 

A reduction of £3,822 million in impairment losses, from £10,926 million in 2010 to £7,104 million in the current year, arises from continued improving business quality and portfolio trends resulting from the Group's prudent risk appetite, together with a significant reduction in impairment losses incurred by the Group's international businesses.

 

Total assets at 31 December 2011 were £558,143 million, £15,651 million, or 3 per cent, lower compared to £573,794 million at 31 December 2010, reflecting the continuing disposal of assets which are outside of the Group's risk appetite, customer deleveraging and de-risking and subdued demand in lending markets.

 

Debt securities in issue decreased by £25,272 million, or 25 per cent, to £75,449 million compared to £100,721 million at 31 December 2010 as funding requirements decreased in line with reductions in asset balances, reflecting the strategy of disposing of exposures outside of the Group's risk appetite.

 



 

FINANCIAL REVIEW (continued)

 

Shareholders' equity decreased by £1,445 million, from £19,842 million to £18,397 million at 31 December 2011, reflecting the loss for the year, offset by gains on cash flow hedges.

 

The Group's total capital ratio at 31 December 2011 improved to 14.9 per cent from 13.9 per cent at 31 December 2010.  During the year, risk-weighted assets were reduced by £51,349 million, or 20 per cent, from £250,598 million to £199,249 million at 31 December 2011.

PRINCIPAL RISKS AND UNCERTAINTIES

 

The principal risks and uncertainties facing the Group in 2012 are:

 

Liquidity and funding

 

Risk definition

Liquidity risk is defined as the risk that the Group has insufficient financial resources to meet its commitments as they fall due, or can only secure them at excessive cost.

 

Funding risk is defined as the risk that the Group does not have sufficiently stable and diverse sources of funding or the funding structure is inefficient.

 

Principal risks

Liquidity and funding continues to remain a key area of focus for the Group and the industry as a whole.  Like all major banks, the Group is dependent on confidence in the short and long term wholesale funding markets. Should the Group, due to exceptional circumstances, be unable to continue to source sustainable funding, its ability to fund its financial obligations could be impacted.

 

The combination of right-sizing the Lloyds Banking Group balance sheet and continued development of the retail deposit base has seen the Lloyds Banking Group's wholesale funding requirement reduce in the past year. The progress Lloyds Banking Group has made to date in diversifying its funding sources has further strengthened its funding base.

 

During the first half of 2011 the Lloyds Banking Group accelerated term funding initiatives and the run down of certain non-core asset portfolios allowing a further reduction in total government and central bank facilities. Lloyds Banking Group repaid its remaining drawings under the Bank of England SLS scheme in full in June 2011.  Outstandings under the Credit Guarantee Scheme reduced in line with their contractual maturities, with £23.5 billion remaining at end December.  The outstanding amount matures during 2012.

 

The second half of 2011 has seen more difficult funding markets as investor confidence was impacted by concerns over the US debt ceiling and subsequent downgrade.  This was followed by increased fears over Eurozone sovereign debt levels, downgrades and possible defaults and concerns are ongoing over the potential downside effects from financial market volatility.  Despite this Lloyds Banking Group continued to fund adequately, maintaining a broadly stable stock of primary liquid assets during the year and meeting its regulatory liquidity ratio targets at all times.

 

Liquidity is managed at the aggregate Lloyds Banking Group level, with active monitoring at both business unit and Group level. Monitoring and control processes are in place to address both internal and regulatory requirements. In a stress situation the level of monitoring and reporting is increased commensurate with the nature of the stress event.

 

The Lloyds Banking Group carries out stress testing of its liquidity position against a range of scenarios, including those prescribed by the FSA. Lloyds Banking Group's liquidity risk appetite is also calibrated against a number of stressed liquidity metrics.

 



 

PRINCIPAL RISKS AND UNCERTAINTIES (continued)

 

Lloyds Banking Group's stress testing framework considers these factors, including the impact of a range of economic and liquidity stress scenarios over both short and longer term horizons.  Internal stress testing results at 31 December 2011 show that Lloyds Banking Group has liquidity resources representing more than 130 per cent of modelled outflows from all wholesale funding sources, corporate deposits and rating dependent contracts under the Group's severe liquidity stress scenario.  In 2011, Lloyds Banking Group has maintained its liquidity levels in excess of the ILG regulatory minimum (FSA's Individual Liquidity Adequacy Standards) at all times.  Funding projections show Lloyds Banking Group will achieve the proposed Basel lll liquidity and funding requirements in advance of expected implementation dates.

 

Lloyds Banking Group's stress testing shows that further credit rating downgrades may reduce investor appetite for some of the Group's liability classes and therefore funding capacity. In the fourth quarter of 2011, Lloyds Banking Group experienced downgrades in its long-term rating of between one and two notches from three of the major rating agencies.  The impact that Lloyds Banking Group experienced following the downgrades were consistent with the Group's modelled outcomes based on the stress testing framework.  Lloyds Banking Group has materially reduced its wholesale funding in recent years and operates a well diversified funding platform which together lessen the impact of stress events.

 

Lloyds Banking Group's borrowing costs and issuance in the capital markets are dependent on a number of factors, and increased cost or reduction of capacity could materially adversely affect the Group's results of operations, financial condition and prospects. In particular, reduction in the credit rating of Lloyds Banking Group or deterioration in the capital markets' perception of the Group's financial resilience, could significantly increase its borrowing costs and limit its issuance capacity in the capital markets.  The impact on the Lloyds Banking Group's funding cost is subject to a number of assumptions and uncertainties and is therefore impossible to quantify precisely.

 

The downgrades that Lloyds Banking Group experienced in the fourth quarter of 2011, did not significantly change its borrowing costs, reduce its issuance capacity or require significant collateral posting. Lloyds Banking Group notes the recent announcements from Moody's placing the ratings of 114 European financial institutions, including Lloyds Banking Group, on review for downgrade. Even in the case of a simultaneous two notch downgrade from all rating agencies, the Group would remain investment grade.

 

At 31 December 2011, Lloyds Banking Group had £202 billion of highly liquid unencumbered assets in its liquidity portfolio which are available to meet cash and collateral outflows.  This liquidity is available for deployment at immediate notice, subject to complying with regulatory requirements, and is a key component of the Group's liquidity management process.

 

Mitigating actions

The Group takes many mitigating actions with respect to this principal risk, key examples include:

 

Lloyds Banking Group has maintained its liquidity levels in excess of the ILG regulatory minimum (FSA's Individual Liquidity Adequacy Standards) at all times. Funding projections show that Lloyds Banking Group will achieve the proposed Basel lll liquidity and funding metrics in advance of expected implementation dates.  The Liquidity Coverage Ratio (LCR) is due to be implemented on 1 January 2015 and the Net Stable Funding Ratio (NSFR) has a 1 January 2018 implementation date.  The European Commission released its proposal for implementing Basel lll into Europe (CRD IV) in July 2011 and we note that discussions over the final detail are ongoing.



 

PRINCIPAL RISKS AND UNCERTAINTIES (continued)

 

The Group carries out monthly stress testing of its liquidity position against a range of scenarios, including those prescribed by the FSA.  The Group's liquidity risk appetite is also calibrated against a number of stressed liquidity metrics.

 

The key dependencies on successfully funding the Lloyds Banking Group's balance sheet include the continued functioning of the money and capital markets; successful right-sizing of Lloyds Banking Group's balance sheet; the repayment of the government Credit Guarantee Scheme facilities in accordance with the agreed terms; no more than limited further deterioration in the UK's and Lloyds Banking Group's credit rating; and no significant or sudden withdrawal of deposits resulting in increased reliance on money markets. Additionally, the Lloyds Banking Group has entered into a number of EU state aid related obligations to achieve reductions in certain parts of its balance sheet by the end of 2014.  These are assumed within Lloyds Banking Group's funding plan. The requirement to meet this deadline may result in the Lloyds Banking Group having to provide funding to support these asset reductions and/or disposals and may also result in a lower price being achieved.

 

 

Credit

 

Risk definition

The risk of reductions in earnings and/or value, through financial loss, as a result of the failure of the party with whom the Group has contracted to meet its obligations (both on and off balance sheet).

 

Principal risks

Arising in the Retail, Wholesale, Commercial and Wealth and International operations, reflecting the risks inherent in the Group's lending activities.  Adverse changes in the credit quality of the Group's UK and/or international borrowers and counterparties, or in their behaviour, would be expected to reduce the value of the Group's assets and materially increase the Group's write-downs and allowances for impairment losses.  Credit risk can be affected by a range of factors, including, inter alia, increased unemployment, reduced asset values, lower consumer spending, increased personal or corporate insolvency levels, reduced corporate profits, increased interest rates or higher tenant defaults. Over the last four years, the global banking crisis and economic downturn has driven cyclically high bad debt charges. These have arisen from the Group's lending to:

 

- Wholesale customers (including those in Wealth and International): where companies continue to face difficult business conditions. Impairment levels have reduced materially since the peak of the economic downturn and more aggressive risk appetite in the HBOS businesses when elevated corporate default levels and illiquid commercial property markets resulted in heightened impairment charges. The reduction in public sector spending is deepening and exports are failing to offset domestic weakness. The possibility of further economic weakness remains. Financial market instability represents an additional downside risk. The Group has exposure in both the UK and internationally, including Europe, Ireland, USA and Australia, particularly in commercial real estate lending, where we have a high level of lending secured on secondary and tertiary assets.

 

- Retail customers: this portfolio will remain strongly linked to the economic environment, with inter alia house price falls, unemployment increases, consumer over-indebtedness and rising interest rates possible impacts to the secured and unsecured retail exposures.

 



 

PRINCIPAL RISKS AND UNCERTAINTIES (continued)

 

Mitigating actions

The Group takes many mitigating actions with respect to this principal risk, key examples being that the Group follows a relationship based business model with risk management processes, appetites and experienced staff in place.

 

 

Regulatory

 

Risk definition

Regulatory risk is the risk of reductions in earnings and/ or value, through financial or reputational loss, from failing to comply with the applicable laws, regulations or codes.

 

Independent Commission on Banking

The Government appointed an independent Commission on Banking (ICB) to review possible measures to reform the banking system and promote stability and competition.  The ICB published its final report on September 2011 putting forward recommendations to require ring-fencing of the retail activities of banks from their investment banking activities and additional capital requirements beyond those required under current drafts of the Capital Requirements Directive IV.  The Report also makes recommendations in relation to the competitiveness of the UK banking market, including enhancing the competition remit of the new Financial Conduct Authority (FCA), implementing a new industry-wide switching solution by September 2013, and improving transparency.  The ICB, which following the final report was disbanded, had the authority only to make recommendations, which the Government could choose to accept or reject.

 

The ICB specifically recommended in relation to Lloyds Banking Group's EU mandated branch disposal (Project Verde), that, to create a strong challenger in the UK banking market, the entity which results from the divestiture should have a share of the personal current account (PCA) market of at least 6 per cent (although this does not need to arise solely from the current accounts acquired from the Company) and a funding position at least as strong as its peers.  The ICB did not specify a definitive timeframe for the divested entity to achieve a 6 per cent market share of PCAs but recommended that a market investigation should be carefully considered by competition authorities if 'a strong and effective challenger' has not resulted from Lloyd Banking Group's divestiture by 2015.  The ICB did not recommend explicitly that Lloyds Banking Group should increase the size of the Project Verde disposal agreed with the European Commission but recommended that the Government prioritise the emergence of a strong new challenger over reducing market concentration through a 'substantially enhanced' divestiture by Lloyds Banking Group.

 

The Government published its response to the ICB recommendations on 19 December 2011.  The Government supported the recommendation that an entity with a larger share of the PCA market than the 4.6 per cent originally proposed might produce a more effective competitor.  In relation to Lloyds Banking Group's announcement that it was to pursue exclusive negotiations with the Co-operative Group, the Government commented that such a transaction would deliver a significant enhancement of the PCA market share, with the share divested by Lloyds Banking Group combining with the Co-operative Group's existing share to create a competitor with approximately 7-8 per cent.  The Government also stated that the execution of the divestment is a commercial matter, and it has no intention of using its shareholding to deliver an enhancement.

 



 

PRINCIPAL RISKS AND UNCERTAINTIES (continued)

 

New regulatory regime

On 27 January 2012, the Government published the Financial Services Bill.  The proposed new UK regulatory architecture will see the transition of regulatory and supervisory powers from the FSA to the new Financial Conduct Authority (FCA) and Prudential Regulatory Authority (PRA).  The PRA will be responsible for supervising banks, building societies and other large firms.  The FCA will focus on consumer protection and market regulation.  The Bill is also proposing new responsibilities and powers for the FCA.  The most noteworthy are the proposed greater powers for the FCA in relation to competition and the proposal to widen its scope to include consumer credit.  The Bill is expected to take effect in early 2013.

 

In April 2011, the FSA commenced an internal reorganisation as a first step in a process towards the formal transition of regulatory and supervisory powers from the FSA to the new FCA and PRA in 2013.  Until this time the responsibility for regulating and supervising the activities of the subsidiaries will remain with the FSA.  On 2 April the FSA will introduce a new 'twin peaks' model and the intention is to move the FSA as close as possible to the new style of regulation outlined in the Bill.  There will be two independent groups of supervisors for banks, insurers and major investment firms covering prudential and conduct.  (All other firms (ie those not dual regulated) will be solely supervised by the conduct supervisors).

 

In addition, the European Banking Authority, the European insurance and Occupational Pensions Authority and the European securities and Markets Authority as new EU Supervisory Authorities are likely to have greater influence on regulatory matters across the EU.

 

Capital and liquidity

Evolving capital and liquidity requirements continue to be a priority for Lloyds Banking Group.  The Basel Committee on Banking Supervision has put forward proposals for a reform package which changes the regulatory capital and liquidity standards, the definition of 'capital', introduces new definitions for the calculation of counterparty credit risk and leverage ratios, additional capital buffers and development of a global liquidity standard. Implementation of these changes is expected to be phased in between 2013 and 2018.

 

Anti bribery

The Bribery Act 2010 came fully into force on 1 July 2011.  It enhances previous laws on bribery and is supported by some detailed guidance issued by the Ministry of Justice on the steps a business needs to take to embed 'adequate procedures' to prevent bribery. A company convicted of failing to have 'adequate procedures' to prevent bribery could receive an unlimited fine. The Group operates a group-wide Anti-Bribery Policy, applicable to all of its businesses, operations and employees, which incorporates the requirements of the UK Bribery Act 2010.

 

US regulation

Significant regulatory initiatives from the US impacting the Group include the Dodd-Frank Act (which imposes specific requirements for systemic risk oversight, securities market conduct and oversight, bank capital standards, arrangements for the liquidation of failing systemically significant financial institutions and restrictions to the ability of banks to engage in proprietary trading activities known as the 'Volcker Rule').  The Act will have both business and operational implications for the Group within and beyond the US.  In addition the Foreign Account Tax Compliance Act (FATCA) requires non-US financial institutions to enter into disclosure agreements with the US Treasury and all non-financial non-US entities to report and or certify their ownership of US assets in foreign accounts or be subject to 30 per cent withholding tax.



 

PRINCIPAL RISKS AND UNCERTAINTIES (continued)

 

European regulation

At a European level, the pace of regulatory reform has increased with a number of new directives or changes to existing directives planned in the next 12 months including a revised Markets in Financial Instruments Directive, Transparency Directive, Insurance Mediation Directive and a Fifth Undertakings in Collective Investments in Transferable Securities Directive as well as a proposed Directive regulating Packaged Retail Investment Products.

 

Mitigating actions

The Group takes many mitigating actions with respect to this principal risk, key examples include:

 

Independent Commission on Banking

We continue to play a constructive role in the debate with the government and other stakeholders on all issues under consideration in relation to the ICB's recommendations.

 

New regulatory regime

Lloyds Banking Group continues to work closely with the regulatory authorities and industry associations to ensure that it is able to identify and respond to regulatory changes and mitigate against risks to the Group and its stakeholders.

 

Capital and liquidity

Lloyds Banking Group is continuously assessing the impacts of regulatory developments which could have a material effect on the Group and is progressing its plans to implement regulatory changes and directives through change management programmes.

 

Anti bribery

The Group has no appetite for bribery and explicitly prohibits the payment, offer, acceptance or request of a bribe, including 'facilitation payments'.

 

The Group has enhanced its internal compliance processes including those associated with payment screening, colleague training and hospitality.

 

US and European regulation

Lloyds Banking Group is continuously assessing the impacts of regulatory developments which could have a material effect on the Group and is progressing with its plans to implement regulatory changes and directives through change management programmes. The Group is also continuing to progress its plans to achieve Solvency II compliance.



 

PRINCIPAL RISKS AND UNCERTAINTIES (continued)

 

Market risk

 

Risk definition

The risk of reductions in earnings and/or value, through financial or reputational loss, from unfavourable market moves; including changes in, and increased volatility of, interest rates, market-implied inflation rates, credit spreads, foreign exchange rates, equity, property and commodity prices.

 

Principal risks

The Group has a number of Market risks, the principal ones being:

 

- There is a risk to the Group's banking income arising from the level of interest rates and the margin of interbank rates over central bank rates. A further banking risk arises from competitive pressures on product terms in existing loans and deposits, which sometimes restrict the Group in its ability to change interest rates applying to customers in response to changes in interbank and central bank rates.

 

- Equity market movements and changes in credit spreads impact the Group's results.

 

- The main equity market risks arise in the staff pension schemes.

 

- Credit spread risk arises in the life assurance companies, pension schemes and banking businesses.

 

Continuing concerns about the fiscal position in Eurozone countries resulted in increased credit spreads in the areas affected, and fears of contagion affected the Euro and widened spreads between central bank and interbank rates.

 

Mitigating actions

The Group takes many mitigating actions with respect to this principal risk, key examples include:

 

Market risk is managed within a Lloyds Banking Board approved framework using a range of metrics to monitor against stated appetite and potential market conditions.

 

Market Risk is reported regularly to appropriate committees.

 

The Group's trading activity is small relative to our peers and is not considered to be a principal risk.

 

 

Customer treatment

 

Risk definition

The risk of regulatory censure and/or a reduction in earnings/value, through financial or reputational loss, from inappropriate or poor customer treatment.



 

PRINCIPAL RISKS AND UNCERTAINTIES (continued)

 

Principal risks

Customer treatment and how the Group manages its customer relationships affect all aspects of the Group's operations and are closely aligned with achievement of Lloyds Banking Group's strategic vision to be the best bank for customers.  As a provider of a wide range of financial services products and numerous distribution channels to an extremely broad and varied customer base, we face significant conduct risks, such as: products or services not meeting the needs of our customers; sales processes which could result in selling products to customers which do not meet their needs; failure to deal with a customer's complaint effectively where we have got it wrong and not met customer expectations.

 

There remains a high level of scrutiny regarding the treatment of customers by financial institutions from regulatory bodies, the press and politicians. The FSA in particular continues to drive focus on conduct of business activities through its supervision activity.

 

There is a risk that certain aspects of the Group's business may be determined by regulatory bodies or the courts as not being conducted in accordance with applicable laws or regulations, or with what is fair and reasonable in their opinion. The Group may also be liable for damages to third parties harmed by the conduct of its business.

 

Mitigating actions

The Group takes many mitigating actions with respect to this principal risk, key examples include:

 

Lloyds Banking Group's Conduct Risk Strategy and supporting framework have been designed to support our vision and strategic aim to put the customer at the heart of everything we do. We have developed and implemented a framework to enable us to deliver for our customers, which is supported by Policies and Standards in key areas, including product governance, sales, responsible lending, customers in financial difficulties, claims and complaints handling.

 

Lloyds Banking Group actively engages with regulatory bodies and other stakeholders in developing its understanding of current customer treatment concerns.

 

 

People

 

Risk definition

The risk of reductions in earnings or value through financial or reputational loss arising from ineffectively leading colleagues responsibly and proficiently, managing people resource, supporting and developing colleague talent, or meeting regulatory obligations related to our people.

 

Principal risks

The quality and effectiveness of our people are fundamental to its success.  Consequently, the Group's management of material people risks is critical to deliver against its long-term strategic objectives. Over the next year the Group's ability to manage people risks successfully may be affected by the following key drivers:

 

- Lloyds Banking Group's continuing structural consolidation and the sale of part of our branch network under Project Verde may result in disruption to our ability to lead and manage our people effectively



 

PRINCIPAL RISKS AND UNCERTAINTIES (continued)

 

- The continually changing, more rigorous regulatory environment may impact people strategy, remuneration practices and retention.

 

- Macroeconomic conditions and negative media attention on the banking sector may impact retention, colleague sentiment and engagement.

 

Mitigating actions

The Group takes many mitigating actions with respect to this principal risk, key examples include:

 

- Strong focus on leadership and colleague engagement, through delivery of strategies to attract, retain and develop high calibre staff together with implementation of rigorous succession planning.

 

- A continued focus on people risk management across the Group.

 

- Ensuring compliance with regulatory requirements related to Approved Persons and the FSA Remuneration Code, and embedding compliant and appropriate colleague behaviours in line with Group policies, values and people risk priorities.

 

- Strengthening risk management culture and capability across the Group, together with further embedding of risk objectives in the colleague performance and reward process.

 

State funding and state aid

HM Treasury currently holds approximately 40.2 per cent of Lloyds Banking Group plc's ordinary share capital.  United Kingdom Financial Investments Limited (UKFI) as manager of HM Treasury's shareholding continues to operate in line with the framework document between UKFI and HM Treasury managing the investment in Lloyds Banking Group plc on a commercial basis without interference in day-to-day management decisions.  There is a risk that a change in Government priorities could result in the framework agreement currently in place being replaced leading to interference in the operations of the Group, although there have been no indications that the Government intends to change the existing operating arrangements.

 

Lloyds Banking Group made a number of undertakings to HM Treasury arising from the capital and funding support, including the provision of additional lending to certain mortgage and business sectors for the two years to 28 February 2011, and other matters relating to corporate governance and colleague remuneration.  The lending commitments were subject to prudent commercial lending and pricing criteria, the availability of sufficient funding and sufficient demand from creditworthy customers.  These lending commitments were delivered in full in the second year.

 

The subsequent agreement (known as 'Merlin') between five major UK banks (including Lloyds Banking Group) and the Government in relation to gross business lending capacity in the 2011 calendar year was subject to a similar set of criteria.  Lloyds Banking Group delivered in full its share of the commitments by the five banks, both in respect of lending to Small and Medium Sized Enterprises ('SMEs') and in respect of overall gross business lending.  Lloyds Banking Group has made a unilateral lending pledge for 2012 as part of its publicly announced SME charter.

 



 

PRINCIPAL RISKS AND UNCERTAINTIES (continued)

 

In addition, Lloyds Banking Group is subject to European state aid obligations in line with the Restructuring Plan agreed with HM Treasury and the EU College of Commissioners in November 2009, which is designed to support the long-term viability of the Group and remedy any distortion of competition and trade in the European Union (EU) arising from the State aid given to Lloyds Banking Group.

 

This has placed a number of requirements on the Lloyds Banking Group including an asset reductions target from a defined pool of assets by the end of 2014 and the disposal of a certain portion of its retail business by the end of November 2013. In June 2011 Lloyds Banking Group issued an Information Memorandum to potential bidders of this retail banking business, which the European Commission confirmed met the requirements to commence the formal sale process for the sale no later than 30 November 2011. On 14 December 2011 Lloyds Banking Group announced that having reviewed the formal offers made, its preferred option was for a direct sale and that it was entering into exclusive discussions with The Co-operative Group.  Lloyds Banking Group is also continuing to progress an Initial Public Offering (IPO) in parallel. Lloyds Banking Group continues to work closely with the EU Commission, HM Treasury and the Monitoring Trustee appointed by the EU Commission to ensure the successful implementation of the Restructuring Plan for the Retail banking business.

 

 



 

 

CONSOLIDATED INCOME STATEMENT

 




2011 


2010 


Note 


£ million 


£ million 







Interest and similar income



16,748 


18,502 

Interest and similar expense



(8,891)


(9,677)

Net interest income



7,857 


8,825 

Fee and commission income



1,208 


1,281 

Fee and commission expense



(286)


(237)

Net fee and commission income



922 


1,044 

Net trading income



(646)


771 

Other operating income



461 


1,665 

Other income


737 


3,480 

Total income



8,594 


12,305 

Payment protection insurance provision

14 


(1,155)


Other operating expenses



(3,823)


(5,162)

Total operating expenses


(4,978)


(5,162)

Trading surplus



3,616 


7,143 

Impairment 


(7,104)


(10,926)

Share of results of joint ventures and associates



27 


(88)

Loss before tax



(3,461)


(3,871)

Taxation


356 


68 

Loss for the year



(3,105)


(3,803)







Profit attributable to non-controlling interests




10 

Loss attributable to equity shareholders



(3,105)


(3,813)

Loss for the year



(3,105)


(3,803)

 

 



 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 



2011 


2010 



£ million 


£ million 






Loss for the year


(3,105)


(3,803)

Other comprehensive income:





Movements in revaluation reserve in respect of available-for-sale financial assets:



Change in fair value


(90)


197 

Income statement transfers in respect of disposals


(72)


(52)

Income statement transfers in respect of impairment


749 


641 

Other income statement transfers


(76)


(62)

Taxation


(129)


(228)



382 


496 

Movements in cash flow hedging reserve:





Effective portion of changes in fair value

1,350 


(782)

Net income statement transfers


373 


1,377 

Taxation


(447)


(171)



1,276 


424 

Currency translation differences (tax: nil)



(207)

Other comprehensive income for the year, net of tax


1,660 


713 

Total comprehensive income for the year


(1,445)


(3,090)






Total comprehensive income attributable to non-controlling interests



10 

Total comprehensive income attributable to equity shareholders


(1,445)


(3,100)

Total comprehensive income for the year


(1,445)


(3,090)

 

 



 

CONSOLIDATED BALANCE SHEET

 



As at 
31 December 
2011 

As at 
31 December 
2010 


Note 


£ million 


£ million 







Assets






Cash and balances at central banks



3,070 


2,375 

Items in course of collection from banks



431 


319 

Trading and other financial assets at fair value through profit or loss


22,315 


24,696 

Derivative financial instruments



36,283 


29,451 

Loans and receivables:






Loans and advances to banks



89,490 


61,349 

Loans and advances to customers


376,355 


405,525 

Debt securities



11,886 


23,632 




477,731 


490,506 

Available-for-sale financial assets



8,288 


14,422 

Investment properties



1,185 


789 

Investments in joint ventures and associates



302 


401 

Goodwill



385 


376 

Other intangible assets



69 


58 

Tangible fixed assets



2,367 


3,433 

Current tax recoverable



593 


214 

Deferred tax assets



4,050 


4,826 

Other assets



1,074 


1,928 

Total assets



558,143 


573,794 

 

 



 

CONSOLIDATED BALANCE SHEET

 



As at 
31 December 
2011 

As at 
31 December 
2010 


Note 


£ million 


£ million 







Equity and liabilities






Liabilities






Deposits from banks



150,070 


143,056 

Customer deposits



235,855 


241,517 

Items in course of transmission to banks



332 


251 

Trading liabilities



20,805 


18,786 

Derivative financial instruments



35,262 


27,268 

Notes in circulation



1,145 


1,074 

Debt securities in issue

10 


75,449 


100,721 

Other liabilities



4,539 


5,013 

Current tax liabilities



54 


42 

Deferred tax liabilities




Other provisions



1,063 


786 

Subordinated liabilities

11 


15,155 


15,236 

Total liabilities



539,730 


553,751 







Equity






Share capital

12 


5,847 


5,847 

Share premium account

13 


27,479 


27,479 

Other reserves

13 


2,275 


615 

Retained profits

13 


(17,204)


(14,099)

Shareholders' equity



18,397 


19,842 

Non-controlling interests



16 


201 

Total equity



18,413 


20,043 

Total equity and liabilities



558,143 


573,794 

 

 



 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 



Attributable to equity shareholders





Share capital 

and 

premium 

Other 

reserves 


Retained 

profits 


Total 

Non- 
controlling 

interests 


Total 



£ million 

£ million 


£ million 


£ million 


£ million 


£ million 














Balance at 1 January 2011


33,326 


615 


(14,099)


19,842 


201 


20,043 

Comprehensive income













Loss for the year




(3,105)


(3,105)



(3,105)

Other comprehensive income













Movements in revaluation reserve in respect of available-for-sale financial assets, net of tax



382 



382 



382 

Movements in cash flow hedging reserve, net of tax



1,276 



1,276 



1,276 

Currency translation differences, net of tax







Total other comprehensive income



1,660 



1,660 



1,660 

Total comprehensive income



1,660 


(3,105)


(1,445)



(1,445)

Transactions with owners













Change in non-controlling interests






(185)


(185)

Balance at 31 December 2011


33,326 


2,275 


(17,204)


18,397 


16 


18,413 



 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued)

 



Attributable to equity shareholders





Share capital 

and 

premium 

Other 

reserves 


Retained 

profits 


Total 

Non- 
controlling 

interests 


Total 



£ million 

£ million 


£ million 


£ million 


£ million 


£ million 














Balance at 1 January 2010


32,531 


(517)


(9,867)


22,147 


206 


22,353 

Comprehensive income













(Loss) profit for the year




(3,813)


(3,813)


10 


(3,803)

Other comprehensive income













Movements in revaluation reserve in respect of available-for-sale financial assets, net of tax



496 



496 



496 

Movements in cash flow hedging reserve, net of tax



424 



424 



424 

Currency translation differences, net of tax



(207)



(207)



(207)

Total other comprehensive income



713 



713 



713 

Total comprehensive income



713 


(3,813)


(3,100)


10 


(3,090)

Transactions with owners













Dividends






(15)


(15)

Issue of ordinary and preference shares


795 




795 



795 

Capital redemption reserve



419 


(419)




Total transactions with owners


795 


419 


(419)


795 


(15)


780 

Balance at 31 December 2010


33,326 


615 


(14,099)


19,842 


201 


20,043 

 



 

CONSOLIDATED CASH FLOW STATEMENT

 


2011 

2010 



£ million 


£ million 






Loss before tax


(3,461)


(3,871)

Adjustments for:





Change in operating assets


7,821 


71,910 

Change in operating liabilities


(14,304)


(79,189)

Non-cash and other items


1,912 


(22)

Tax received


169 


628 

Net cash used in operating activities


(7,863)


(10,544)






Cash flows from investing activities





Purchase of available-for-sale financial assets


(3,967)


(1,561)

Proceeds from sale and maturity of available-for-sale financial assets


9,747 


10,293 

Purchase of fixed assets


(391)


(983)

Proceeds from sale of fixed assets


1,348 


594 

Acquisition of businesses, net of cash acquired


(62)


(60)

Disposal of businesses, net of cash disposed


298 


2,587 

Net cash provided by investing activities


6,973 


10,870 






Cash flows from financing activities





Dividends paid to non-controlling interests



(15)

Interest paid on subordinated liabilities


(481)


(500)

Repayment of subordinated liabilities


(94)


(331)

Net cash used in financing activities


(575)


(846)

Effects of exchange rate changes on cash and cash equivalents



Change in cash and cash equivalents


(1,464)


(520)

Cash and cash equivalents at beginning of year


6,382 


6,902 

Cash and cash equivalents at end of year


4,918 


6,382 

 

Cash and cash equivalents comprise cash and balances at central banks (excluding mandatory deposits) and amounts due from banks with a maturity of less than three months.

 



NOTES

 



Page 

1

Accounting policies, presentation and estimates

21 

2

Other income

24 

3

Operating expenses

24 

4

Impairment

25 

5

Taxation

25 

6

Trading and other financial assets at fair value through profit or loss

26 

7

Loans and advances to customers

26 

8

Allowance for impairment losses on loans and receivables

27 

9

Securitisations and covered bonds

28 

10

Debt securities in issue

29 

11

Subordinated liabilities

29 

12

Share capital

29 

13

Reserves

29 

14

Payment protection insurance

30 

15

Contingent liabilities and commitments

31 

16

Capital ratios

34 

17

Related party transactions

35 

18

Future accounting developments

38 

19

Ultimate parent undertaking

39 

20

Other information

39 

 



1.       Accounting policies, presentation and estimates

 

These financial statements as at and for the year to 31 December 2011 have been prepared in accordance with the Listing Rules of the Financial Services Authority (FSA) relating to Preliminary Results.  They do not include all of the information required for full annual financial statements.  The Group's consolidated financial statements as at and for the year ended 31 December 2011 have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.  Copies of the 2011 annual report and accounts will be published on the Lloyds Banking Group's website and will be available upon request from Investor Relations, Lloyds Banking Group plc, 25 Gresham Street, London EC2V 7HN, in March 2012. 

 

The directors consider that it is appropriate to continue to adopt the going concern basis in preparing the Group's financial statements.  In reaching this assessment, the directors have considered projections for the Group's capital and funding position and have had regard to the factors set out in Principal risks and uncertainties: Liquidity and funding on pages 3 to 5.

 

Accounting policies

The accounting policies are consistent with those applied by the Group in its 2010 annual report and accounts.

 

Critical accounting estimates and judgements

The preparation of the Group's financial statements requires management to make judgements, estimates and assumptions that impact the application of accounting policies and the reported amounts of assets, liabilities, income and expenses.  Due to the inherent uncertainty in making estimates, actual results reported in future periods include amounts which differ from those estimates.  Estimates, judgements and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.  Save for the estimates detailed below, there have been no significant changes in the basis upon which estimates have been determined, compared to that applied at 31 December 2010.

 

Payment protection insurance

The Group has charged a provision of £1,155 million in respect of payment protection insurance (PPI) policies as a result of discussions with the FSA and a judgment handed down by the UK High Court (see note 14 for more information).  The provision represents management's best estimate of the anticipated costs of related customer contact and/or redress, including administration expenses.  However, there are still a number of uncertainties as to the eventual costs from any such contact and/or redress given the inherent difficulties of assessing the impact of detailed implementation of the FSA Policy Statement of 10 August 2010 for all PPI complaints, uncertainties around the ultimate emergence period for complaints, the availability of supporting evidence and the activities of claims management companies, all of which will significantly affect complaints volumes, uphold rates and redress costs.

 

The provision requires significant judgement by management in determining appropriate assumptions, which include the level of complaints, uphold rates, proactive contact and response rates, Financial Ombudsman Service referral and uphold rates as well as redress costs for each of the many different populations of customers identified by the Group in its analyses used to determine the best estimate of the anticipated costs of redress.  If the level of complaints was one percentage point higher (lower) than estimated for all policies open within the last six years then the provision made in 2011 would increase (decrease) by approximately £25 million.  However, it should be noted that there are a large number of inter-dependent assumptions under-pinning the provision; this sensitivity assumes that all assumptions, other than the level of complaints, remain constant.



1.      Accounting policies, presentation and estimates (continued)

 

The Group re-evaluates the assumptions underlying its analysis at each reporting date as more information becomes available.  As noted above, there is inherent uncertainty in making estimates; actual results in future periods may differ from the amount provided.

 

Recoverability of deferred tax assets

At 31 December 2011 the Group carried deferred tax assets on its balance sheet of £4,050 million (2010: £4,826 million) and deferred tax liabilities of £1 million (2010: £1 million). This presentation takes into account the ability of the Group to net deferred tax assets and liabilities only where there is a legally enforceable right of offset. The largest category of deferred tax asset relates to tax losses carried forward.

 

The recoverability of the Group's deferred tax assets in respect of carry forward losses is based on an assessment of future levels of taxable profit expected to arise that can be offset against these losses. The Group's expectations as to the level of future taxable profits take into account the Group's long-term financial and strategic plan, and anticipated future tax adjusting items.

 

In making this assessment account is taken of, business plans, the five year board approved operating plan and the following future risk factors:

·       The expected future economic outlook as set out in the Chief Executive's statement contained in the  Annual Report of Lloyds Banking Group.

·       The retail banking business disposal as required by the European Commission; and

·       Future regulatory change.

 

The Group's total deferred tax asset includes £3,563 million (2010 £3,896 million) in respect of trading losses carried forward.  The tax losses have arisen in individual legal entities and will be used as future taxable profits arise in those legal entities, though substantially all of the unused tax losses for which a deferred tax asset has been recognised arise in Bank of Scotland plc.  The deferred tax asset will be utilised over different time periods in each of the entities in which the tax losses arise.  The Group's assessment is that these tax losses will be fully used within eight years.

 

Under current UK tax law there is no expiry date for unused tax losses.

 

Deferred tax assets totalling £570 million (2010: £597 million) have not been recognised in respect of certain capital losses carried forward, trading losses carried forward (mainly in certain overseas companies) and unrelieved foreign tax credits as there are no predicted future capital or taxable profits against which these losses can be recognised.

 

New accounting pronouncements

The Group has adopted the following new standards and amendments to standards which became effective for financial years beginning on or after 1 January 2011.  None of these standards or amendments have had a material impact on these condensed interim financial statements.

 

(i)    Amendment to IAS 32 Financial Instruments: Presentation - 'Classification of Rights Issues'.  Requires rights issues denominated in a currency other than the functional currency of the issuer to be classified as equity regardless of the currency in which the exercise price is denominated.

 

(ii)   IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments.  Clarifies that when an entity renegotiates the terms of its debt with the result that the liability is extinguished by the debtor issuing its own equity

1.       Accounting policies, presentation and estimates (continued)

 

instruments to the creditor, a gain or loss is recognised in the income statement representing the difference between the carrying value of the financial liability and the fair value of the equity instruments issued; the fair value of the financial liability is used to measure the gain or loss where the fair value of the equity instruments cannot be reliably measured.

 

(iii) Improvements to IFRSs (issued May 2010).  Amends IFRS 7 Financial instruments: Disclosure to require further disclosures in respect of collateral held by the Group as security for financial assets and sets out minor amendments to other standards as part of the annual improvements process.

 

(iv)   Amendment to IFRIC 14 Prepayments of a Minimum Funding Requirement.  Applies when an entity is subject to minimum funding requirements and makes an early payment of contributions to cover those requirements and permits such an entity to treat the benefit of such an early payment as an asset.

 

(v)   IAS 24 Related Party Disclosures (Revised).  Simplifies the definition of a related party and provides a partial exemption from the requirement to disclose transactions and outstanding balances with the government and government-related entities.  The Group has taken advantage of an exemption in respect of government and government-related transactions that permits an entity to disclose only transactions that are individually or collectively significant.  Details of related party transactions are disclosed in note 17.

 

Details of those IFRS pronouncements which will be relevant to the Group but which were not effective at 31 December 2011 and which have not been applied in preparing these financial statements are given in note 18.

 

The ultimate parent undertaking, Lloyds Banking Group plc, produces consolidated accounts which set out the basis of the segments through which it manages performance and allocates resources across the consolidated Lloyds Banking Group.

 

 



2.       Other income



2011 


2010 



£m 


£m 






Fee and commission income:





Current account fees


357 


343 

Credit and debit card fees


214 


203 

Other fees and commissions


637 


735 



1,208 


1,281 

Fee and commission expense


(286)


(237)

Net fee and commission income


922 


1,044 

Net trading income


(646)


771 

Gains on capital transactions1



433 

Other


461 


1,232 

Other operating income


461 


1,665 

Total other income


737 


3,480 

 

1

During 2010, as part of the Lloyds Banking Group's management of capital, the Group exchanged certain existing subordinated debt securities for new subordinated debt securities and ordinary shares.  These exchanges resulted in a gain on extinguishment of the existing liabilities of £433 million in the year ended 31 December 2010, being the difference between the carrying amount of the securities extinguished and the fair value of the new securities issued together with related fees and costs.

 

 

3.       Operating expenses



2011 


2010 



£m 


£m 






Administrative expenses:





Staff


2,026 


2,239 

Premises and equipment


434 


450 

Customer goodwill payments provision



500 

Other expenses


962 


1,072 



3,422 


4,261 

Depreciation and amortisation


336 


849 

Impairment of tangible fixed assets


65 


52 

Total operating expenses, excluding payment protection insurance provision

3,823 


5,162 

Payment protection insurance provision (note 14)

1,155 


Total operating expenses

4,978 


5,162 

 

 

 



 

4.       Impairment



2011 


2010 



£m 


£m 






Impairment losses on loans and receivables:





Loans and advances to customers


6,961 


10,786 

Debt securities classified as loans and receivables


60 


40 

Impairment losses on loans and receivables (note 8)


7,021 


10,826 

Impairment of available-for-sale financial assets


78 


100 

Other credit risk provisions



Total impairment charged to the income statement


7,104 


10,926 

 

 

5.       Taxation

 

A reconciliation of the tax credit that would result from applying the standard UK corporation tax rate to the loss before tax to the actual tax credit is given below:



2011 


2010 



£m 


£m 






Loss before tax


(3,461)


(3,871)






Tax credit thereon at UK corporation tax rate of 26.5 per cent (2010: 28 per cent)


917 


1,084 

Factors affecting tax credit:





UK corporation tax rate change


(350)


(132)

Disallowed and non-taxable items


(48)


(36)

Overseas tax rate differences


(8)


116 

Gains exempted or covered by capital losses


60 


172 

Tax losses surrendered for no payment


(34)


(626)

Tax losses where no deferred tax recognised


(246)


(510)

Deferred tax on tax losses not previously recognised


40 


Adjustments in respect of previous years


20 


(10)

Effect of profit (loss) in joint ventures and associates



(25)

Other items


(2)


35 

Tax credit


356 


68 

 

On 23 March 2011, the Government announced that the corporation tax rate applicable from 1 April 2011 would be 26 per cent.  This change passed into legislation on 29 March 2011.  The enacted reduction in the main rate of corporation tax from 28 per cent to 27 per cent with effect from 1 April 2011 had been incorporated in the Group's deferred tax calculations as at 31 December 2010.  In addition, the Finance Act 2011, which passed into law on 19 July 2011, included legislation to reduce the main rate of corporation tax from 26 per cent to 25 per cent with effect from 1 April 2012.  The change in the main rate of corporation tax from 27 per cent to 25 per cent has resulted in a reduction in the Group's net deferred tax asset at 31 December 2011 of £343 million, comprising the £350 million charge included in the income statement and a £7 million credit included in equity.

 

The proposed further reductions in the rate of corporation tax by 1 per cent per annum to 23 per cent by 1 April 2014 are expected to be enacted separately each year.  The effect of these further changes upon the Group's deferred tax balances and leasing business cannot be reliably quantified at this stage.

 

 



 

6.       Trading and other financial assets at fair value through profit or loss



2011 

2010 



£m 


£m 






Trading assets


21,840 


24,274 






Other financial assets at fair value through profit or loss:





Loans and advances to customers


54 


Debt securities


135 


101 

Equity shares


286 


321 



475 


422 

Total trading and other financial assets at fair value through profit or loss


22,315 


24,696 

 

 

7.       Loans and advances to customers

 



2011 

2010 



£m 


£m 






Agriculture, forestry and fishing


588 


602 

Energy and water supply


1,670 


1,145 

Manufacturing


2,946 


3,881 

Construction


6,818 


6,983 

Transport, distribution and hotels


20,135 


23,232 

Postal and communications


357 


1,032 

Property companies


42,418 


58,092 

Financial, business and other services


33,077 


32,029 

Personal:





Mortgages


243,222 


246,690 

Other


12,920 


16,974 

Lease financing


3,840 


4,458 

Hire purchase


772 


1,358 

Due from fellow Group undertakings


30,943 


34,365 



399,706 


430,841 

Allowance for impairment losses on loans and advances (note 8)


(23,351)


(25,316)

Total loans and advances to customers


376,355 


405,525 

 

Loans and advances to customers include advances securitised under the Group's securitisation and covered bond programmes.  Further details are given in note 9.

 

 



 

8.       Allowance for impairment losses on loans and receivables



2011 

2010 



£m 


£m 






Balance at 1 January


26,607 


23,187 

Exchange and other adjustments


(374)


412 

Advances written off


(8,650)


(7,351)

Recoveries of advances written off in previous years


66 


57 

Unwinding of discount


(171)


(375)

Charge to the income statement (note 4)


7,021 


10,826 

Disposal of subsidiary undertakings



(149)

Balance at 31 December


24,499 


26,607 

 





In respect of:





Loans and advances to customers (note 7)


23,351 


25,316 

Debt securities


1,148 


1,291 

Balance at 31 December


24,499 


26,607 

 

 



9.       Securitisations and covered bonds

 

The Group's principal securitisation and covered bond programmes, together with the balances of the loans subject to these arrangements and the carrying value of the notes in issue at 31 December, are listed in the table below.

 



2011


2010










Loans and 
advances 

securitised 


Notes in 

issue 


Loans and 
advances 

securitised 


Notes in 

issue 



£m 


£m 


£m 


£m 










Securitisation programmes









UK residential mortgages


91,246 


68,425 


102,801 


83,367 

US residential mortgage-backed securities


4,659 


6,351 


7,197 


7,221 

Irish residential mortgages


5,531 


5,661 


6,061 


6,191 

Credit card receivables


6,792 


4,810 


7,372 


3,856 

Dutch residential mortgages


4,960 


4,817 


4,551 


4,415 

Personal loans




3,012 


2,011 

Commercial loans


680 


631 


667 


633 

Motor vehicle loans


1,573 


1,341 


926 


975 



115,441 


92,036 


132,587 


108,669 

Less held by the Group




(65,118)




(78,686)

Total securitisation programmes (note 10)




26,918 




29,983 










Covered bond programmes









Residential mortgage-backed


48,521 


38,882 


55,032 


44,271 

Social housing loan-backed


3,370 


2,605 


3,377 


2,400 



51,891 


41,487 


58,409 


46,671 

Less held by the Group




(13,515)




(17,239)

Total covered bond programmes (note 10)




27,972 




29,432 

Total securitisation and covered bond programmes


54,890 




59,415 

 

Securitisation programmes

Loans and advances to customers and debt securities classified as loans and receivables include loans securitised under the Group's securitisation programmes, the majority of which have been sold by subsidiary companies to bankruptcy remote special purpose entities (SPEs).  As the SPEs are funded by the issue of debt on terms whereby the majority of the risks and rewards of the portfolio are retained by the subsidiary, the SPEs are consolidated fully and all of these loans are retained on the Group's balance sheet, with the related notes in issue included within debt securities in issue.  In addition to the SPEs detailed above, the Group sponsors a conduit programme, Grampian.

 

Covered bond programmes

Certain loans and advances to customers have been assigned to bankruptcy remote limited liability partnerships to provide security to issues of covered bonds by the Group.  The Group retains all of the risks and rewards associated with these loans and the partnerships are consolidated fully with the loans retained on the Group's balance sheet, and the related covered bonds in issue included within debt securities in issue.

 

Cash deposits of £13,381 million (2010: £25,139 million) held by the Group are restricted in use to repayment of the debt securities issued by the SPEs and other legal obligations.



10.     Debt securities in issue



2011 

2010 



£m 


£m 






Medium-term notes issued


12,491 


24,430 

Covered bonds (note 9)


27,972 


29,432 

Certificates of deposit


350 


3,061 

Securitisation notes (note 9)


26,918 


29,983 

Commercial paper


6,159 


11,317 



73,890 


98,223 

Amounts due to fellow Group undertakings


1,559 


2,498 

Total debt securities in issue


75,449 


100,721 

 

 

11.     Subordinated liabilities

 

The movement in subordinated liabilities during the year was as follows:





£m 






At 1 January 2011




15,236 

Repurchases and redemptions during the year




(94)

Foreign exchange and other movements




13 

At 31 December 2011




15,155 

 

 

12.     Share capital

 

Ordinary share capital in issue is as follows:

Ordinary shares of 25 pence each


Number of 
shares 
(millions) 


£m 






At 1 January and 31 December 2011


23,388 


5,847 

 

 

13.     Reserves






Other reserves





Share 
premium 



Available- 
for-sale 


Cash flow 
hedging 


Merger 
and other 



Total 


Retained 
profits 



£m 



£m 


£m 


£m 



£m 


£m 
















At 1 January 2011


27,479 



(899)


(415)


1,929 



615 


(14,099)

Loss for the year









(3,105)

Change in fair value of available-for-sale assets (net of tax)




(45)





(45)


Change in fair value of hedging derivatives
(net of tax)





996 




996 


Transfers to income statement (net of tax)




427 


280 




707 


Exchange and other adjustments









At 31 December 2011


27,479 



(517)


861 


1,931 



2,275 


(17,204)
















 



14.     Payment protection insurance

 

There has been extensive scrutiny of the payment protection insurance (PPI) market in recent years.

 

In October 2010, the UK Competition Commission confirmed its decision to prohibit the active sale of PPI by a distributor to a customer within seven days of a sale of credit.  This followed the completion of its formal investigation into the supply of PPI services (other than store card PPI) to non-business customers in the UK in January 2009 and a referral of the proposed prohibition to the Competition Appeal Tribunal.  The Competition Commission consulted on the wording of a draft Order to implement its findings from October 2010, and published the final Order on 24 March 2011 which became effective on 6 April 2011.  Following an earlier decision to stop selling single premium PPI products, the Group ceased to offer PPI products to its customers in July 2010.

 

On 29 September 2009 the FSA announced that several firms had agreed to carry out reviews of past sales of single premium loan protection insurance.  Lloyds Banking Group agreed in principle that it would undertake a review in relation to sales of single premium loan protection insurance made through its branch network since 1 July 2007.  That review will now form part of the ongoing PPI work referred to below.

 

On 1 July 2008, the Financial Ombudsman Service (FOS) referred concerns regarding the handling of PPI complaints to the Financial Services Authority (FSA) as an issue of wider implication.  On 29 September 2009 and 9 March 2010, the FSA issued consultation papers on PPI complaints handling.  The FSA published its Policy Statement on 10 August 2010, setting out evidential provisions and guidance on the fair assessment of a complaint and the calculation of redress, as well as a requirement for firms to reassess historically rejected complaints which had to be implemented by 1 December 2010.

 

On 8 October 2010, the British Bankers' Association (BBA), the principal trade association for the UK banking and financial services sector, filed an application for permission to seek judicial review against the FSA and the FOS.  The BBA sought an order quashing the FSA Policy Statement and an order quashing the decision of the FOS to determine PPI sales in accordance with the guidance published on its website in November 2008.

 

The Judicial Review hearing was held in late January 2011 and on 20 April 2011 judgment was handed down by the High Court dismissing the BBA's application.  On 9 May 2011, the BBA confirmed that the banks and the BBA did not intend to appeal the judgment.

 

After publication of the judgment, the Group entered into discussions with the FSA with a view to seeking clarity around the detailed implementation of the Policy Statement.  As a result, and given the initial analysis that the Group has conducted of compliance with applicable sales standards, which is continuing, the Group concluded that there are certain circumstances where customer contact and/or redress will be appropriate.  Accordingly the Group made a provision in its income statement for the year ended 31 December 2011 of £1,155 million in respect of the anticipated costs of such contact and/or redress, including administration expenses.  During 2011, the Group made redress payments of £375 million to customers. The Group anticipates that all claims will be settled by 2015. However, there are still a number of uncertainties as to the eventual costs from any such contact and/or redress given the inherent difficulties of assessing the impact of detailed implementation of the Policy Statement for all PPI complaints, uncertainties around the ultimate emergence period for complaints, the availability of supporting evidence and the activities of claims management companies, all of which will significantly affect complaints volumes, uphold rates and redress costs.



15.     Contingent liabilities and commitments

 

Interchange fees

The European Commission has adopted a formal decision finding that an infringement of European Commission competition laws has arisen from arrangements whereby MasterCard set a uniform Multilateral Interchange Fee (MIF) in respect of cross-border transactions in relation to the use of a MasterCard or Maestro branded payment card.  The European Commission has required that the MIF be reduced to zero for relevant cross-border transactions within the European Economic Area.  This decision has been appealed to the General Court of the European Union (the General Court).  Lloyds TSB Bank plc and Bank of Scotland plc (along with certain other MasterCard issuers) have successfully applied to intervene in the appeal in support of MasterCard's position that the arrangements for the charging of the MIF are compatible with European Union competition laws.  The UK Government has also intervened in the General Court appeal supporting the European Commission position.  An oral hearing took place on 8 July 2011 but judgment is not expected for six to twelve months.  MasterCard has reached an understanding with the European Commission on a new methodology for calculating intra-European Economic Area MIF on an interim basis pending the outcome of the appeal.

 

Meanwhile, the European Commission is pursuing an investigation with a view to deciding whether arrangements adopted by Visa for the levying of the MIF in respect of cross-border payment transactions also infringe European Union competition laws.  In this regard Visa reached an agreement with the European Commission to reduce the level of interchange for cross-border debit card transactions to the interim levels agreed by MasterCard.  The UK's Office of Fair Trading has also commenced similar investigations relating to the MIF in respect of domestic transactions in relation to both the MasterCard and Visa payment schemes.  The ultimate impact of the investigations on the Group can only be known at the conclusion of these investigations and any relevant appeal proceedings.

 

Interbank offered rate setting investigations

Several government agencies in the UK, US and overseas, including the US Commodity Futures Trading Commission, the US SEC, the US Department of Justice and the FSA as well as the European Commission, are conducting investigations into submissions made by panel members to the bodies that set various interbank offered rates.  The Group, and/or its subsidiaries, were (at the relevant time) and remain members of various panels that submit data to these bodies.  The Group has received requests from some government agencies for information and is co-operating with their investigations.  In addition, recently certain Lloyds Banking Group companies have been named in private lawsuits, including purported class action suits in the US with regard to the setting of London interbank offered rates (LIBOR).  It is currently not possible to predict the scope and ultimate outcome of the various regulatory investigations or private lawsuits, including the timing and scale of the potential impact of any investigations and private lawsuits on the Group.

 

Financial Services Compensation Scheme (FSCS)

The FSCS is the UK's independent statutory compensation fund for customers of authorised financial services firms and pays compensation if a firm is unable to pay claims against it.  The FSCS is funded by levies on the industry (and recoveries and borrowings where appropriate).  The levies raised comprise both management expenses levies and, where necessary, compensation levies on authorised firms.

 

Following the default of a number of deposit takers in 2008, the FSCS borrowed funds from HM Treasury to meet the compensation costs for customers of those firms.  The borrowings with HM Treasury, which total circa £20 billion, are on an interest-only basis until 31 March 2012 and the FSCS and HM Treasury are currently discussing the terms for refinancing these borrowings to take effect from 1 April 2012.  Each deposit-taking institution contributes towards the management expenses levies in proportion to their share of total protected deposits on 31 December of the year preceding the scheme year, which runs from 1 April to 31 March.  In determining an appropriate accrual in respect of the management expenses levy, certain assumptions have been

15.     Contingent liabilities and commitments (continued)

 

made including the proportion of total protected deposits held by the Group, the level and timing of repayments to be made by the FSCS to HM Treasury and the interest rate to be charged by HM Treasury.  For the year ended 31 December 2011, the Group has charged £81 million (2010: £28 million) to the income statement in respect of the costs of the FSCS.

 

Whilst it is expected that the substantial majority of the principal will be repaid from funds the FSCS receives from asset sales, surplus cash flow or other recoveries in relation to the assets of the firms that defaulted, to the extent that there remains a shortfall, the FSCS will raise compensation levies on all deposit-taking participants.  The amount of any future compensation levies also depends on a number of factors including the level of protected deposits and the population of deposit-taking participants and will be determined at a later date.  As such, although the Group's share of such compensation levies could be material, the Group has not recognised a provision in respect of them in these financial statements.

 

Shareholder complaints

Lloyds Banking Group plc and two former members of its Board of Directors have been named as defendants in a purported securities class action pending in the United States District Court for the Southern District of New York.  The complaint, dated 23 November 2011, asserts claims under the Securities Exchange Act of 1934 in connection with alleged material omissions from statements made in 2008 in connection with the acquisition of HBOS. No quantum is specified.

 

In addition, a UK-based shareholder action group has threatened multi-claimant claims on a similar basis against Lloyds Banking Group plc and two former directors in the UK.  No claim has yet been issued.

 

Lloyds Banking Group considers that the claims are without merit and will defend them vigorously. The claims have not been quantified and it is not possible to estimate the ultimate financial impact on the Group at this early stage.

 

FSA investigation into Bank of Scotland

As previously disclosed, in 2009 the FSA commenced a supervisory review into HBOS.  The supervisory review has now been superseded as the FSA has commenced enforcement proceedings against Bank of Scotland plc in relation to its Corporate Division pre 2009.  The proceedings are ongoing and the Group is co-operating fully.  It is too early to predict the outcome or estimate reliably any potential financial effects of the enforcement proceedings but they are not currently expected to be material.

 

Regulatory matters

In the course of its business, the Group is engaged in discussions with the FSA in relation to a range of conduct of business matters, including complaints handling, packaged bank accounts, savings accounts, product terms and conditions, interest-only mortgages, sales processes and remuneration schemes.  The Group is keen to ensure that any regulatory concerns are understood and addressed.  The ultimate impact on the Group of these discussions can only be known at the conclusion of such discussions.

 

Other legal actions and regulatory matters

In addition, during the ordinary course of business the Group is subject to other threatened and actual legal proceedings (which may include class action lawsuits brought on behalf of customers, shareholders or other third parties), regulatory investigations, regulatory challenges and enforcement actions, both in the UK and overseas.  All such material matters are periodically reassessed, with the assistance of external professional advisers where appropriate, to determine the likelihood of the Group incurring a liability.   

 

15.     Contingent liabilities and commitments (continued)

 

In those instances where it is concluded that it is more likely than not that a payment will be made, a provision is established to management's best

 

estimate of the amount required to settle the obligation at the relevant balance sheet date.  In some cases it will not be possible to form a view, either because the facts are unclear or because further time is needed properly to assess the merits of the case and no provisions are held against such matters.  However the Group does not currently expect the final outcome of any such case to have a material adverse effect on its financial position.

 

Contingent liabilities and commitments arising from the banking business



2011 

2010 



£m 


£m 






Contingent liabilities





Acceptances and endorsements



Other:





Other items serving as direct credit substitutes


110 


103 

Performance bonds and other transaction-related contingencies


674 


575 



784 


678 

Total contingent liabilities


787 


679 






Commitments





Documentary credits and other short-term trade-related transactions



Undrawn formal standby facilities, credit lines and other commitments to lend:




Less than 1 year original maturity:




Mortgage offers made


6,311 


6,875 

Other commitments


22,851 


32,130 



29,162 


39,005 

1 year or over original maturity


16,442 


12,617 

Total commitments


45,612 


51,624 

 



 

16.     Capital ratios

 

Capital resources


As at 31  December 

2011 


As at 31  December 

2010 



£m 


£m 






Core tier 1





Shareholders' equity per balance sheet


18,397 


19,842 

Non-controlling interests per balance sheet


16 


201 

Regulatory adjustments to non-controlling interests


12 


29 

Regulatory adjustments:





Unrealised reserve on available-for-sale debt securities


859 


1,245 

Unrealised reserve on available-for-sale equity investments


(342)


(346)

Cash flow hedging reserve


(861)


415 

Other items


(16)


- 



18,065 


21,386 

Less: deductions from core tier 1





Goodwill


(416)


(401)

Intangible assets


(69)


(58)

50 per cent excess of expected losses over impairment


(684)


- 

50 per cent of securitisation positions


(84)


(132)

Core tier 1 capital


16,812 


20,795 






Preferred securities1


700 


700 

Less: deductions from tier 1





50 per cent of material holdings


(80)


(25)

Total tier 1 capital


17,432 


21,470 






Tier 2





Undated subordinated debt


4,812 


4,819 

Dated subordinated debt


7,639 


8,244 

Unrealised gains on available for sale equity investments


342 


346 

Eligible provisions


1,203 


1,750 

Less: deductions from tier 2





50 per cent excess of expected losses over impairment


(684)


- 

50 per cent of securitisation positions


(84)


(132)

50 per cent of material holdings


(80)


(25)

Total tier 2 capital


13,148 


15,002 






Supervisory deductions





Unconsolidated investments


(983)


(1,672)

Total supervisory deductions


(983)


(1,672)

Total capital resources


29,597 


34,800 






Risk-weighted assets


199,249 


250,598 

Core tier 1 capital ratio


8.4% 


8.3% 

Tier 1 capital ratio


8.7% 


8.6% 

Total capital ratio


14.9% 


13.9% 

 

1

Covered by grandfathering provisions issued by FSA.

 

 

 

 



17.     Related party transactions

 

Balances and transactions with Lloyds Banking Group plc and fellow Group undertakings

The Bank and its subsidiaries have balances due to and from the Bank's ultimate parent company, Lloyds Banking Group plc, and fellow Group undertakings of the Bank.  These are included on the balance sheet as follows:

 


2011 

2010 


£m 


£m 

Assets




Derivative financial instruments

4,226 


1,497 

Loans and advances to banks

85,800 


55,053 

Loans and advances to customers

30,943 


34,365 

Debt securities classified as loans and receivables

1,171 


3,196 

Trading and other financial assets at fair value through profit or loss

7,739 


3,998 





Liabilities




Deposits from banks

144,502 


131,138 

Customer deposits

35,267 


40,949 

Trading liabilities

6,690 


3,294 

Derivative financial instruments

8,562 


4,196 

Debt securities in issue

1,559 


2,498 

Other


145 

Subordinated liabilities

11,151 


11,266 

 

During 2011 the Group earned £853 million (2010: £1,147 million) of interest income and incurred £2,296 million (2010: £2,565 million) of interest expense on balances and transactions with Lloyds Banking Group plc and fellow Group undertakings.

 

 

UK Government

In January 2009, the UK Government through HM Treasury became a related party of Lloyds Banking Group plc, the Bank's ultimate parent company, following its subscription for ordinary shares issued under a placing and open offer.  As at 31 December 2011, HM Treasury held a 40.2 per cent (31 December 2010: 40.6 per cent) interest in Lloyds Banking Group plc's ordinary share capital and consequently HM Treasury remained a related party of Lloyds Banking Group plc, and therefore of the Group, during the year ended 31 December 2011.

 

From 1 January 2011, in accordance with IAS 24 (Revised), UK Government-controlled entities became related parties of the Group.  The Group regards the Bank of England and banks controlled by the UK Government, comprising The Royal Bank of Scotland Group plc, Northern Rock (Asset Management) plc and Bradford & Bingley plc, as related parties.

 

 



17.     Related party transactions (continued)

 

Since 1 January 2011, the Group has had the following significant transactions with the UK Government or UK Government-related entities:

 

Government and central bank facilities

During the year ended 31 December 2011, the Lloyds Banking Group participated in a number of schemes operated by the UK Government and central banks and made available to eligible banks and building societies.

 

Special liquidity scheme and credit guarantee scheme

The Bank of England's UK Special Liquidity Scheme was launched in April 2008 to allow financial institutions to swap temporarily illiquid assets for treasury bills, with fees charged based on the spread between 3-month LIBOR and the 3-month gilt repo rate.  The scheme will operate for up to three years after the end of the drawdown period (30 January 2009) at the Bank of England's discretion.  The Lloyds Banking Group did not utilise the Special Liquidity Scheme at 31 December 2011.

 

HM Treasury launched the Credit Guarantee Scheme in October 2008 as part of a range of measures announced by the UK Government intended to ease the turbulence in the UK banking system.  It charged a commercial fee for the guarantee of new short and medium term debt issuance.  The fee payable to HM treasury on guaranteed issues was based on a per annum rate of 50 basis points plus the median five-year credit default swap spread. The drawdown window for the Credit Guarantee Scheme closed for new issuance at the end of February 2010.  At 31 December 2011, the Lloyds Banking Group had £23.5 billion of debt in issue under the Credit Guarantee Scheme (31 December 2010: £45.4 billion).  During the year, fees of £28 million paid to HM Treasury in respect of guaranteed funding were included in the Lloyds Banking Group's income statement.

 

Lending commitments

The formal lending commitments entered into in connection with the Lloyds Banking Group's proposed participation in the Government Asset Protection Scheme have now expired and in February 2011, Lloyds Banking Group plc (together with Barclays, Royal Bank of Scotland, HSBC and Santander) announced, as part of the 'Project Merlin' agreement with HM Treasury, its capacity and willingness to increase business lending (including to small and medium-sized enterprises) during 2011.

 

Business Growth Fund

In May 2011 the Group agreed, together with The Royal Bank of Scotland plc (and three other non-related parties), to subscribe for shares in the Business Growth Fund plc which is the company created to fulfil the role of the Business Growth Fund as set out in the British Bankers' Association's Business Taskforce Report of October 2010.  During 2011, the Lloyds Banking Group has incurred sunk costs of £4 million which have been written off. As at 31 December 2011, the Lloyds Banking Group's investment in the Business Growth Fund was £20 million.

 

Other government-related entities

Other than the transactions referred to above, there were no other significant transactions with the UK Government and UK Government-controlled entities (including UK Government-controlled banks) during the period that were not made in the ordinary course of business or that were unusual in their nature or conditions.

 

Other related party transactions

During 2011, the Group sold at fair value certain non-government bonds, equities and alternative assets to Lloyds TSB Pension Scheme No.1 for £79 million and to Lloyds TSB Group Pension Scheme No.2 for £43 million.

 

 



 

17.     Related party transactions (continued)

 

Except as noted above, other related party transactions for the year ended 31 December 2011 are similar in nature to those for the year ended 31 December 2010.

 

Taxation

Group relief was surrendered for no payment as per note 5.



18.     Future accounting developments

 

The following pronouncements may have a significant effect on the Group's financial statements but are not applicable for the year ending 31 December 2011 and have not been applied in preparing these financial statements.  Save as disclosed, the full impact of these accounting changes is being assessed by the Group.

 

Pronouncement

Nature of change

IASB effective date

Amendments to IFRS 7 Financial Instruments: Disclosures -

'Disclosures-Offsetting Financial Assets and Financial Liabilities'

Requires an entity to disclose information to enable users of its financial statements to evaluate the effect or potential effect of netting arrangements on the entity's balance sheet.

Annual and interim periods beginning on or after 1 January 2013.

IFRS 10 Consolidated Financial Statements

Supersedes IAS 27 Consolidated and Separate Financial Statements and SIC-12 Consolidation - Special Purpose Entities and establishes principles for the preparation of consolidated financial statements when an entity controls one or more entities.

Annual periods beginning on or after 1 January 2013.

IFRS 12 Disclosure of Interests in Other Entities

Requires an entity to disclose information that enables users of financial statements to evaluate the nature of, and risks associated with, its interests in other entities and the effects of those interests on its financial position, financial performance and cash flows.

Annual periods beginning on or after 1 January 2013.

IFRS 13 Fair Value Measurement

The standard defines fair value, sets out a framework for measuring fair value and requires disclosures about fair value measurements.  It applies to IFRSs that require or permit fair value measurements or disclosures about fair value measurements.

Annual periods beginning on or after 1 January 2013.

IAS 19 Employee Benefits

Prescribes the accounting and disclosure by employers for employee benefits.  Actuarial gains and losses (remeasurements) in respect of defined benefit pension schemes can no longer be deferred using the corridor approach and must be recognised immediately in other comprehensive income.

Annual periods beginning on or after 1 January 2013.

Amendments to IAS 32 Financial Instruments: Presentation - 'Offsetting Financial Assets and Financial Liabilities'

Inserts application guidance to address inconsistencies identified in applying the offsetting criteria used in the standard.  Some gross settlement systems may qualify for offsetting where they exhibit certain characteristics akin to net settlement.

Annual periods beginning on or after 1 January 2014.

IFRS 9 Financial Instruments1

Replaces those parts of IAS 39 Financial Instruments: Recognition and Measurement relating to the classification, measurement and derecognition of financial assets and liabilities.  Requires financial assets to be classified into two measurement categories, fair value and amortised cost, on the basis of the objectives of the entity's business model for managing its financial assets and the contractual cash flow characteristics of the instruments.  The available-for-sale financial asset and held-to-maturity investment categories in IAS 39 will be eliminated.  The requirements for financial liabilities and derecognition are broadly unchanged from IAS 39.

Annual periods beginning on or after 1 January 2015.

 

1

IFRS 9 is the initial stage of the project to replace IAS 39.  Future stages are expected to result in amendments to IFRS 9 to deal with changes to the impairment of financial assets measured at amortised cost and hedge accounting.  Until all stages of the replacement project are complete, it is not possible to determine the overall impact on the financial statements of the replacement of IAS 39.

 

As at 23 February 2012, these pronouncements were awaiting EU endorsement.



 

19.     Ultimate parent undertaking

 

Bank of Scotland plc's ultimate parent undertaking and controlling party is Lloyds Banking Group plc which is incorporated in Scotland.  Lloyds Banking Group plc will produce consolidated accounts for the year to 31 December 2011; these will be published in March 2012, copies will be obtainable from Investor Relations,Lloyds Banking Group, 25 Gresham Street, London EC2V 7HN and available for download from www.lloydsbankinggroup.com

 

 

20.     Other information

 

The financial information included in these condensed interim financial statements does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006.  Statutory accounts for the year ended 31 December 2011 were approved by the directors on 23 February 2012 and will be delivered to the Registrar of Companies following publication in March 2012.  The auditors' report on those accounts was unqualified and did not include a statement under sections 498(2) (accounting records or returns inadequate or accounts not agreeing with records and returns) or 498(3) (failure to obtain necessary information and explanations) of the Companies Act 2006.

 

 



 

 

 

 

 

CONTACTS

 

 

 

For further information please contact:

 

INVESTORS AND ANALYSTS

Kate O'Neill

Managing Director, Investor Relations

020 7356 3520

kate.o'[email protected]

 

Charles King

Director of Investor Relations

020 7356 3537

[email protected]

 

 

CORPORATE AFFAIRS

Matthew Young

Group Corporate Affairs Director

020 7356 2231

[email protected]

 

Ed Petter
Group Media Relations Director

020 8936 5655

[email protected]

 

 

 

 

 

 

 

 

 

 

 

 

 

Registered office: Bank of Scotland plc, The Mound, Edinburgh EH1 1YZ

Registered in Scotland no.  SC327000

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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