Lloyds Banking Group, the UK-based financial institution that is 41%-owned by the British government, has become a signatory to the United Nations-backed Principles for Responsible Investment (PRI) as it seeks to regain the trust of customers, shareholders, policymakers and regulators.
The bank, among those embroiled in the Libor interest rate rigging scandal and which is dealing with the fallout from the earlier payment protection insurance (PPI) debacle, is newly listed as on the PRI site – and joins its asset management subsidiary Scottish Widows Investment Partnership as a signatory.
In its submission to the Parliamentary Commission on Banking Standards last week, the group issued what amounted to a ‘mea culpa’ on the failings of the global banking industry.
It acknowledged how banks’ role in the financial crisis – and their pay structures – contributed to mistrust of the industry. More recent issues such as Libor, PPI, money-laundering accusations and ‘rogue state’ financing had “only compounded the problem”.
“A number of these ills were caused by an obsession with financial success and an over-riding fixation on short-term performance, driven by investors ratchetingup required returns, the “war for talent” driving up expected individual returns (i.e. pay and bonuses) and the regulators relying on the market,” the bank said.
Lloyds, which has joint London and New York listings, was formed from the acquisition of HBOS by Lloyds TSB in 2009 and traces its roots to the foundation of Lloyds Bank in 1765 and Bank of Scotland in 1695.
“An obsession with financial success and a fixation on short-term performance”
It has total assets of £970.5bn (€1.2trn) and some 120,000 staff. It says it is ranked as the top UK bank in the FTSE4Good Index and is the top UK bank in the Carbon Disclosure Project’s Carbon Strategy Index Series.
There has been a spate of major firms – such as Tokyo–based Daiwa SB Investments, signing up to the PRI recently. Among other recent signatories are Norway-based funds firm Skagen, private equity firm CVC Capital Partners Luxemburg and BNP Paribas Real Estate Investment Management France, according to the PRI web site.