Lloyds to delay UK branch closures

Taxpayer-backed Lloyds Banking Group has announced that further UK branch closures will be put on hold until the end of 2011 as its new boss Antonio Horta-Osorio completes a strategy overhaul.

Mr Horta-Osorio, who is taking over as chief executive from Eric Daniels, is also speeding up plans to offload more than 600 branches as part of its commitment to meet State aid rules.

The group has until the end of 2013 to complete the sale – which includes Cheltenham & Gloucester, the TSB brand and Intelligent Finance – and has to identify a buyer before the end of this year.

But it said it was pushing ahead with the plan after making “excellent” progress on integrating the Halifax Bank of Scotland business which was rescued at the height of the financial crisis.

Mr Horta-Osorio – previously head of Santander’s UK business – will announce his plans for the group in the summer, around the end of the bank’s first half in June.

Lloyds confirmed that his review will cover all aspects of the business.

It is thought Mr Horta-Osorio’s move to accelerate the disposal plan comes in the hope of convincing the Independent Commission on Banking not to recommend a full-scale break-up of the bank when it reports back in the autumn.

The announcement to put branch closures on hold follows more than two years of swingeing job cuts following the HBOS deal. Over the last 12 months alone, Lloyds has closed seven Halifax, 14 Lloyds TSB and 11 Bank of Scotland branches.

HBOS saddled the group with billions of pounds of bad debts and left Lloyds 41% owned by the Government after a mammoth State bail- out.

Results last week showed its recovery beginning to take hold as it reported annual profits for the first time since the financial crisis, with pre-tax profits of £2.2 billion in 2010 against a £6.3 billion loss the previous year. But the bank faces further challenges as it said margins would be put under pressure by low interest rates and an increasingly competitive market.