An executive in charge of the division at Lloyds Banking Group that was supposed to help rescue troubled firms admitted the unit was out to make a profit, it has emerged.
The confession is significant because Lloyds is embroiled in a legal row with a former customer over its Business Support Unit (BSU).
There are suggestions the BSU operated in a similar manner to RBS’s controversial Global Restructuring Group (GRG), which was found by regulators to have operated as a ‘profit centre’, although its executives initially denied this.
Lloyds is embroiled in a legal row with a former customer over its Business Support Unit (BSU)
Lloyds has been insisting that its BSU was not a profit centre at the time of the financial crisis.
But in the Financial Times in 2008, its boss Duncan Parkes said ‘business support is a “profit centre” ’, and that shareholders expected the bank to ‘achieve appropriate reward’ for helping customers.
Lloyds said write-offs and impairments on customers’ debts ‘mean that the BSU consistently records losses’.
The bank is defending a legal claim from liquidators for Premier Motor Auctions that Lloyds and PwC conspired to remove the entrepreneur behind the Leeds-based firm, allowing Lloyds to take a stake.
Tory MP Kevin Hollinrake, co-chair of the All Party Parliamentary Group on Fair Business Banking, said: ‘What is extraordinary is not that a division of Lloyds would operate with a profit motive, but that the bank and their lawyers would choose to deny it. These denials do not fit comfortably with the idea of facing up to past misconduct.’