UK lender Lloyds TSB has announced plans to plug the GBP2 billion accounting hole in its pension scheme over the next ten years, while also providing additional contributions to the scheme.
Britain’s fifth biggest lender made the announcement in a trading update ahead of releasing its half-year results. Lloyds TSB said that it expects the first six months of the year to deliver a strong trading performance.
The bank said that if the group’s total deficit contributions remain at broadly the same level as in recent years, the accounting deficit (GBP2 billion net of tax) should be eliminated over a period of approximately ten years, and the GBP1.5 billion actuarial deficit over approximately six years.
The bank said that good growth in savings and investment products, especially in bancassurance, has partly offset the expected slowdown in unsecured consumer lending and related insurance products. Retail loan write-offs continued to grow in the first half, but at slower levels, the bank said.
However, high levels of volatility in the equity markets wiped off GBP87 million in five months, mainly affecting the Scottish Widows portfolio.