News In Focus
8 September 2010
Lloyds to meet its own charitable trust in court
Lloyds Banking Group faces legal action from its own Scottish charitable arm, over claims that the sum donated for distribution to charitable causes last year was only a fraction of what it should have been. The Lloyds TSB Foundation for Scotland describes the action, which seems set to reach the Court of Session, as an “action of last resort”.
The disagreement stems from differing interpretations of a 25 year-old covenant, obliging Lloyds to give 1 per cent of its pre-tax profits, averaged over the previous three years, to is charitable foundations in England, Wales, Scotland, Northern Ireland and the Channel Islands. This is then distributed to a variety of individual good causes.
Pro-rated, Scotland receives 19.46 per cent of the total, which, according to the foundation’s chief executive Mary Craig, should have resulted in a payout of £3.5m. Instead, the charity received just £38,920.
Rather than the average £1bn average pre-tax profit on which the foundation based its calculations, Lloyds appears to have used an overall loss of £6.2bn for its most recent year’s figures. This was criticised by Craig as a “new way” of calculating the bank’s obligations under the covenant.
A spokesman for Lloyds Banking Group said: “We disagree with the foundation’s interpretation. However, it would be inappropriate to comment further on the litigation.”