Banks given new rules on bonuses

Banks given new rules on bonuses
New rules on how financial institutions should determine pay and bonuses for staff have been set out by the Financial Services Authority (FSA).

It wants to see bankers' pay deals linked far more closely with the long-term profitability of the banks.

The FSA says that bonuses should not be guaranteed for more than a year, and that senior employees should have their bonuses spread over three years.

Many believe that big bonuses led to excessive risk-taking at banks.

The new code is designed specifically to discourage short-term risk-taking, which many argue was an important factor in triggering the financial crisis.

The FSA is determined that banks' remuneration policies should be consistent with, and promote, effective risk management Hector Sants, FSA chief executive

"The fundamental objective [of the rules] is to sustain market confidence and promote financial stability through removing the incentives for inappropriate risk taking by firms," the FSA said.

But it said that "inappropriate remuneration policies" were a "contributory, rather than a dominant factor" in the crisis.

'Right incentives'

Hector Sants, head of the FSA, said the regulator was "determined that banks' remuneration policies should be consistent with, and promote, effective risk management".

The FSA said there were two main objectives behind the code of practice.

First, to ensure that boards focus more closely on making sure that "the total amount [of pay and bonuses] distributed by a firm is consistent with good risk management and sustainability".

And second, to ensure that overall pay, including bonuses, "provides the right incentives".

To this end, a number of new principles have been added to the FSA's financial regulation handbook.

In particular, these make clear that bonuses should only be guaranteed for 12 months, and that senior employees will see two-thirds of their bonuses paid out over three years.

Mr Sants said the new rules would take effect from January 2010.

The FSA wants banks to submit their remuneration policies to it by the end of October. Firms that do not comply with the code "could face enforcement action", or be forced to hold more cash in reserve should they want to pursue risky strategies.

However, it conceded that the code "is not going to change the bonus culture overnight".

The FSA also reduced the number of banks affected by the code to 26, down from the 47 originally covered.

The Association of British Insurers described the new rules as "an important step forward."

"The new version [of the handbook] is much more likely to deliver the desired outcome without excessive compliance burdens," it added.

Nicholas Stretch at City law firm CMS Cameron McKenna said: "This is not the end of the rules for rewards for bank employees.

"There is still substantial political pressure for capping awards, greater public disclosure and naming and shaming in this sector, both in the UK and internationally, which is likely to continue for some time."

Relocation concerns

The FSA launched a consultation in February looking at measures to discourage excessive risk-taking, and published a draft version of the code in March.

Bankers expressed concerns that the proposed measures on bonuses, some of which have been included in the final code, would encourage institutions to relocate employees outside of the UK, to get round the new rules.

This could have serious implications for the City's position as the world's leading financial centre, and for the UK's tax take, bankers argue.

However, recently there have been concerns that large bonuses are returning amid a boom in profits from investment banking.

And there have been calls for stricter rules on pay from those who criticise what they see as excessive bonuses.

sourced from THE BBC

UK jobless total climbs to 2.4m

The number of people out of work in the UK has risen to its highest level since 1995, official figures have shown.

Unemployment increased by 220,000 to 2,435,000 in the three months to June, taking the jobless rate to 7.8%.

Claims for unemployment benefit were the highest in 12 years, increasing by 24,900 from June to 1.58 million.

 

Average earnings, excluding bonuses, grew at their slowest rate since records began in 2001, the Office for National Statistics said.

The Recession 2009 forum

I would like to set up a recession2009 forum - where we can all exchange thoughts and ideas.

Chat on twitter -

 http://twitter.com/recession2009

or email me at

recession.recession@googlemail.com

hope to chat to you all soon.

Should we pull the plug - Northern Rock makes hefty losses

"is it now time to let Northern Rock go, can we all continue to support the Bank with our own money. If this was a company then it would have gone into adminstration by know. Lets pull the plug on Northern Rock and let it close down - I know at lot of people will loss money but we can't afford to support the bank / share holders any longer"

by N Blakeley - recession 2009

 

Northern Rock has reported a loss of £724.2m for the first six months of 2009, compared with a loss of £585.4m in the first half of last year.

The nationalised bank said that 3.92% of its mortgage loans were more than three months in arrears, well above the national average of 2.39%.

It currently owes the government £10.9bn, but is waiting for European regulatory clearance for more funding.

Northern Rock was nationalised in February 2008

It had to be bailed out by taxpayers in 2007, when its model of borrowing short-term funds from wholesale markets to lend to mortgage borrowers was hit by the credit crunch.

It reported impairment losses from loans and advances of £602.2m for the first six months of the year, compared with £191.6m for the same period the year before.

Unemployment hits 9.5 percent in U.S.

Employers cut more jobs in the U.S. in June causing unemployment to rise to 9.5 percent from 9.4 percent in May, the highest since August 1983.

The Labor Department report shows that in June employers slashed 467,000 jobs and hourly earnings were flat. In May the economy lost 322,000 jobs.

Factory payrolls fell by 136,000 after decreasing 156,000 the prior month. Payrolls at builders fell 79,000 after decreasing 48,000.

read full article at Buffalo Business First

Barclays profit up to almost £3bn

Profits at Barclays' investment banking arm doubled Barclays has announced an 8% rise in first-half profits, boosted by its investment banking division.

Pre-tax profits for the first six months came in at £2.98bn ($5bn), although this was slightly below analysts' forecasts.

Its investment bank Barclays Capital saw profits double to more than £1bn, having picked up some still-successful operations from Lehman Brothers.

But profits at Barclays' UK retail banking arm more than halved.

Profits at Barclays' investment banking arm doubled

Obiturtary of the high street and other companies - UPDATED

Please follow the link to see updated list of high street and companies that have gone in administration since January 2008

Obituary of the high street and other companies

Obiturtary of the high street and other companies - UPDATED

Please follow the link to see updated list of high street and companies that have gone in administration since January 2008

Obituary of the high street and other companies

Latest figures confirm the Great British Recession

July 2, 2009

LONDON: The recession is now on a par with the very worst year of the Great Depression. Revised figures on Tuesday uncovered the full extent of Britain's economic contraction.

The economy shrank by 4.9 per cent in the year to the first quarter of 2009, the Office for National Statistics said. The fall in gross domestic product was far greater than previously calculated, as the government statistician realised the full scale of the fall in company activity.

"Clearly this is now the worst peacetime recession since the 1930s," said economist Michael Saunders of Citigroup. The worst contraction then was a year of about -5 per cent and "this year will not be hugely different".

The contraction in GDP during the first quarter alone was 2.4 per cent - the previous estimate was 1.9 per cent. This was the biggest one-quarter fall in 35 years.

read full article at  The Sydney morning herald

Latest figures confirm the Great British Recession

July 2, 2009

LONDON: The recession is now on a par with the very worst year of the Great Depression. Revised figures on Tuesday uncovered the full extent of Britain's economic contraction.

The economy shrank by 4.9 per cent in the year to the first quarter of 2009, the Office for National Statistics said. The fall in gross domestic product was far greater than previously calculated, as the government statistician realised the full scale of the fall in company activity.

"Clearly this is now the worst peacetime recession since the 1930s," said economist Michael Saunders of Citigroup. The worst contraction then was a year of about -5 per cent and "this year will not be hugely different".

The contraction in GDP during the first quarter alone was 2.4 per cent - the previous estimate was 1.9 per cent. This was the biggest one-quarter fall in 35 years.

read full article at  The Sydney morning herald

Ten US banks fail recession test

May 8 2009

US banks would need a total of £50 billion in additional funds to survive if the recession deepens, the results of government "stress tests" showed.

An assessment of the robustness of the sector found that 10 of the 19 largest banks would need to find extra capital to see them through the bad times.

Bank of America faces the largest potential shortfall of £23 billion.

It joined a list of institutions that also includes Citigroup and Wells Fargo.

The stress tests were designed to gauge whether America's 19 largest banks have enough capital to see them through a deepening of the recession.

After Bank of America, Wells Fargo was found to have the second largest shortfall of £9.1 billion, followed by GMAC with a potential £7.6 billion black hole.

Ten US banks fail recession test

May 8 2009

US banks would need a total of £50 billion in additional funds to survive if the recession deepens, the results of government "stress tests" showed.

An assessment of the robustness of the sector found that 10 of the 19 largest banks would need to find extra capital to see them through the bad times.

Bank of America faces the largest potential shortfall of £23 billion.

It joined a list of institutions that also includes Citigroup and Wells Fargo.

The stress tests were designed to gauge whether America's 19 largest banks have enough capital to see them through a deepening of the recession.

After Bank of America, Wells Fargo was found to have the second largest shortfall of £9.1 billion, followed by GMAC with a potential £7.6 billion black hole.

Citigroup is being asked to raise an additional £3.3 billion to make it secure. Goldman Sachs, JP Morgan Chase and American Express were among the nine banks deemed not to need to raise additional funds.

The stress tests were designed to help regulators assess the ongoing financial stability of US banks.

They look at two models of the economy going forward - one in which unemployment reaches 8.8% next year and house prices drop a further 14%. In the second scenario, joblessness rises to 10.3% and property slips another 22%.

Banks facing a shortfall under the model will have to come up with a plan to raise additional capital by mid June.

 If they cannot do so independently, they may have to turn to the government's £466 billion financial bailout fund.

sourced from Runcorn and Widnes Weekly News

Indicators of economic depression ending-- Google searches vs. job losses

read the full article at examiner.com

Larry Summers, Obama's top economic advisor has summed up the state of the economy today in what Forbes online is calling "promising", but somewhat "obscure" signs of recovery.

 

The Job Impact of the American Recovery and Reinvestment Plan

• "Earlier this year traders were betting there was a one-in-six chance that the Dow would fall below 5,000, he said. Now they say it's one-in-a-hundred.


• The chances that corporate bonds will default has fallen by a third.


• And Google searches for 'economic depression,' which surged to quadruple their normal levels, have since returned to normal. (A growing number of economists do believe that the recession has ended or will end in coming months.)"

read the full article at  examiner.com

Indicators of economic depression ending-- Google searches vs. job losses

read the full article at examiner.com

Larry Summers, Obama's top economic advisor has summed up the state of the economy today in what Forbes online is calling "promising", but somewhat "obscure" signs of recovery.

 

The Job Impact of the American Recovery and Reinvestment Plan

• "Earlier this year traders were betting there was a one-in-six chance that the Dow would fall below 5,000, he said. Now they say it's one-in-a-hundred.


• The chances that corporate bonds will default has fallen by a third.


• And Google searches for 'economic depression,' which surged to quadruple their normal levels, have since returned to normal. (A growing number of economists do believe that the recession has ended or will end in coming months.)"

read the full article at  examiner.com

UK economy shrinking at fastest rate in more than 50 years

Downward revisions to official statistics show output fell 2.4% in the first three months of the year and the recession started three months earlier than thought

The recession facing Britain is even deeper than had been thought and started more than a year ago, it was revealed today.

National income fell in the first quarter of this year by 2.4%, the biggest drop since 1958, as the Office for National Statistics revised its initial estimate of 1.9%.

The figures are much worse than expected. Extended to the whole year, the drop in output in the January to March period is now equal to 4.9% – the worst since records began in 1948.

"We hope the recovery comes as soon as possible but sadly we now know this recession has been longer and deeper than we had thought," said shadow chancellor George Osborne.

"This also means that in the future unemployment will be higher and Labour's debt crisis will be even worse."

Although GDP fell 2.4% in the third quarter of 1979 and first quarter of 1974, statisticians said these were rounded from 2.36% or 2.37%. The figure for this year was exactly 2.4%.

The revision is one of the biggest ever made by the ONS and it said the reasons were changes to its estimate of the construction and services sectors.

The ONS also revised down its figure for the second quarter of last year to -0.1% from zero, meaning the recession started earlier than previously thought. And the fourth quarter of 2008 figure was revised down to a fall of 1.8%.

"The recession, which now begins in the second quarter of 2008 rather than the third, is now thought to be quite a bit deeper than previously thought, and is looking ominously like the early 1980s vintage," said Danny Gabay of Fathom Consulting.

Critics of the Bank of England who called for big interest rate cuts in the first half of last year, will feel justified by the data, since the Bank's monetary policy committee argued into last autumn that there was little likelihood of a recession occurring and delayed rate cuts until October. In fact, the economy had entered one last spring.

Separately, the Trades Union Congress said that while there were signs of "green shoots" in the economy, this was more to do with an easing of the pace of the fall in output rather than that a big recovery was under way.

"This recession is already worse than the 1990s one and is likely to be worse than that of the 1980s," said Richard Excel, TUC labour market expert. "It has been very severe and we are probably only half way through. It will be quite some time until employment and growth return to pre-recession levels."

Paul Gregg, labour market expert from Bristol University, noted that unemployment had started rising earlier in this recession than in previous ones and was "encouraged" that monthly rises in the claimant count appeared to be slowing down.

sourced from The Guardian

UK economy shrinking at fastest rate in more than 50 years

Downward revisions to official statistics show output fell 2.4% in the first three months of the year and the recession started three months earlier than thought

The recession facing Britain is even deeper than had been thought and started more than a year ago, it was revealed today.

National income fell in the first quarter of this year by 2.4%, the biggest drop since 1958, as the Office for National Statistics revised its initial estimate of 1.9%.

The figures are much worse than expected. Extended to the whole year, the drop in output in the January to March period is now equal to 4.9% – the worst since records began in 1948.

"We hope the recovery comes as soon as possible but sadly we now know this recession has been longer and deeper than we had thought," said shadow chancellor George Osborne.

"This also means that in the future unemployment will be higher and Labour's debt crisis will be even worse."

Although GDP fell 2.4% in the third quarter of 1979 and first quarter of 1974, statisticians said these were rounded from 2.36% or 2.37%. The figure for this year was exactly 2.4%.

The revision is one of the biggest ever made by the ONS and it said the reasons were changes to its estimate of the construction and services sectors.

The ONS also revised down its figure for the second quarter of last year to -0.1% from zero, meaning the recession started earlier than previously thought. And the fourth quarter of 2008 figure was revised down to a fall of 1.8%.

"The recession, which now begins in the second quarter of 2008 rather than the third, is now thought to be quite a bit deeper than previously thought, and is looking ominously like the early 1980s vintage," said Danny Gabay of Fathom Consulting.

Critics of the Bank of England who called for big interest rate cuts in the first half of last year, will feel justified by the data, since the Bank's monetary policy committee argued into last autumn that there was little likelihood of a recession occurring and delayed rate cuts until October. In fact, the economy had entered one last spring.

Separately, the Trades Union Congress said that while there were signs of "green shoots" in the economy, this was more to do with an easing of the pace of the fall in output rather than that a big recovery was under way.

"This recession is already worse than the 1990s one and is likely to be worse than that of the 1980s," said Richard Excel, TUC labour market expert. "It has been very severe and we are probably only half way through. It will be quite some time until employment and growth return to pre-recession levels."

Paul Gregg, labour market expert from Bristol University, noted that unemployment had started rising earlier in this recession than in previous ones and was "encouraged" that monthly rises in the claimant count appeared to be slowing down.

sourced from The Guardian

We are in a recession, we have a labour goverment so that all strike

Cadbury workers 'vote on strike'

Cadbury's produces some of the UK's best known chocolate bars Cadbury workers begin voting on possible strike action on Saturday, according to the union Unite. Ballot papers consulting on action will begin to arrive at the homes of workers at the UK's best-known chocolate maker, it said. Unite claims that Cadbury is breaking a long-standing pay deal with workers at its Bourneville, Chirk, Marlbrook and Somerdale plants. About 1,300 people work across the sites, the union said. The ballot will run to 18 August, it added. sourced from THE BBC Postal staff set to strike again The union has warned a national strike could take place Industrial action at the Royal Mail is set to escalate with strike action scheduled for three days next week, the BBC has learned. The strike action on 25, 27 and 28 July comes on top of Friday's one-day walkout by 12,000 Royal Mail employees. The escalating action is in defence of workers who, the Communication Workers Union (CWU) say, are being unduly pressured by Royal Mail managers. The Royal Mail has accused the union of standing in the way of modernisation. 'Illogical cuts' Union members in London and other selected regions are to down tools in the dispute over job cuts and working conditions. This could result in no deliveries of mail on Saturday 25 July, and no work at Royal Mail's London distribution centres on 27 and 28 July, says BBC business correspondent Joe Lynam. The CWU has accused Royal Mail managers of trying to "break the union for good" and accused them of "illogical and arbitrary" job cuts. Deputy General Secretary of the CWU, Dave Ward, said his union recognised that the Royal Mail is "facing huge problems" but said that it had a very different view of what modernisation is needed. The vision that Royal Mail has put to workers involves "endless job cuts, hugely damaging cuts to the service and continuous cuts in our members' pay, pensions and conditions," he said. Paul Tolhurst at the Royal Mail countered that with "mail volumes falling and our profits under huge pressure, there is no real opportunity for us to stop [making] the changes." "Particularly," he added, "as these changes we are trying to put in were agreed with [the union] in 2007." Earlier on Friday, about 400 employees marched on Westminster to deliver letters of protest to the Business Secretary Lord Mandelson. Sell off The Royal Mail is suffering from a big drop in demand for letters as more and more people use the internet to communicate. The government announced last month that it was delaying controversial plans to sell a stake in the postal service to a private company. It maintains that the partial sell off of Royal Mail is required as part of measures to tackle the company's finances - in particular a pensions deficit said to be near £8bn. Lord Mandelson has said the company cannot survive without the sale. The Royal Mail employs more than 150,000 people in the UK, most of whom are represented by the CWU. sourced from THE BBC

We are in a recession, we have a labour goverment so that all strike

Cadbury workers 'vote on strike'

Cadbury's produces some of the UK's best known chocolate bars Cadbury workers begin voting on possible strike action on Saturday, according to the union Unite. Ballot papers consulting on action will begin to arrive at the homes of workers at the UK's best-known chocolate maker, it said. Unite claims that Cadbury is breaking a long-standing pay deal with workers at its Bourneville, Chirk, Marlbrook and Somerdale plants. About 1,300 people work across the sites, the union said. The ballot will run to 18 August, it added. sourced from THE BBC Postal staff set to strike again The union has warned a national strike could take place Industrial action at the Royal Mail is set to escalate with strike action scheduled for three days next week, the BBC has learned. The strike action on 25, 27 and 28 July comes on top of Friday's one-day walkout by 12,000 Royal Mail employees. The escalating action is in defence of workers who, the Communication Workers Union (CWU) say, are being unduly pressured by Royal Mail managers. The Royal Mail has accused the union of standing in the way of modernisation. 'Illogical cuts' Union members in London and other selected regions are to down tools in the dispute over job cuts and working conditions. This could result in no deliveries of mail on Saturday 25 July, and no work at Royal Mail's London distribution centres on 27 and 28 July, says BBC business correspondent Joe Lynam. The CWU has accused Royal Mail managers of trying to "break the union for good" and accused them of "illogical and arbitrary" job cuts. Deputy General Secretary of the CWU, Dave Ward, said his union recognised that the Royal Mail is "facing huge problems" but said that it had a very different view of what modernisation is needed. The vision that Royal Mail has put to workers involves "endless job cuts, hugely damaging cuts to the service and continuous cuts in our members' pay, pensions and conditions," he said. Paul Tolhurst at the Royal Mail countered that with "mail volumes falling and our profits under huge pressure, there is no real opportunity for us to stop [making] the changes." "Particularly," he added, "as these changes we are trying to put in were agreed with [the union] in 2007." Earlier on Friday, about 400 employees marched on Westminster to deliver letters of protest to the Business Secretary Lord Mandelson. Sell off The Royal Mail is suffering from a big drop in demand for letters as more and more people use the internet to communicate. The government announced last month that it was delaying controversial plans to sell a stake in the postal service to a private company. It maintains that the partial sell off of Royal Mail is required as part of measures to tackle the company's finances - in particular a pensions deficit said to be near £8bn. Lord Mandelson has said the company cannot survive without the sale. The Royal Mail employs more than 150,000 people in the UK, most of whom are represented by the CWU. sourced from THE BBC

Lloyds Bank chairman to step down

Sir Victor Blank is to step down as chairman of Lloyds Banking Group by June 2010.

Sir Victor has been chairman of Lloyds since 2006

Following a meeting with the board, Sir Victor said it was "the right time for the Group to appoint a new chairman".

Lord Leitch, who has been appointed deputy chairman, said the board was "very sad" at the decision.

Sir Victor and Lloyds' chief executive, Eric Daniels, have faced criticism for their decision last year to buy HBOS, the troubled owner of Halifax.

The UK Treasury owns 43% of Lloyds.

Sir Victor confirmed he was stepping down just before he went inside Lloyds' headquarters in the City of London on Sunday.

Sir Victor has jumped before he was pushed Robert Peston, BBC business editor Read Robert Peston's blog Lloyds sees HBOS loss of £10..

He told BBC business correspondent Joe Lynam that he "still had lots to do" and denied he was being forced to resign under pressure from shareholders.

In a statement released after the meeting, he said he would continue working until a successor was appointed "to ensure the successful integration of the two banks".

"This remains - in the medium term - a unique value-enhancing opportunity," he added.

Mr Daniels said Sir Victor had played a very important role "during a period of significant change for our company and at a time when there has been unprecedented volatility in the markets".

HBOS losses HBOS made a loss in 2008 of almost £11bn. But Lloyds TSB, as it was called, made a profit of £807m last year, albeit an 80% drop on the previous year.

The two banks together are expected to be in loss this year.

The government earlier this year agreed to insure £260bn of the bank's toxic loans, and to potentially raise its stake in the bank to 65% following the HBOS losses.

The deal was part of the Treasury's taxpayer-backed Asset Protection Scheme to insure banks' riskiest assets against further losses resulting from the credit crisis.

Lloyds' directors do not believe that Sir Victor would have been ousted by shareholders at the forthcoming annual meeting, according to the BBC's business editor, Robert Peston.

However, he believes that UK Financial Investments (UKFI), which manages the government's stake in financial institutions such as Lloyds and the Royal Bank of Scotland, was "acutely aware" of other shareholders' convictions that there had to be a change at the top of Lloyds.

"I am now persuaded that UKFI would have voted its 43% (that's taxpayers' 43%) against him staying on," Mr Peston said.

 'First-class chairman' Lord Leitch said the board "was unanimous in wanting Sir Victor Blank to seek re-election as chairman for another three years".

LLOYDS' TOXIC ASSETS 83% of the £260bn toxic assets came from HBOS 17% come from the books of Lloyds TSB Of the toxic assets, £151bn are in corporate and commercial loans £74bn comes from residential mortgages "We are very sad about Sir Victor's personal decision to retire, although we respect and understand his reasons for it," he said in a statement.

"Sir Victor is a first-class chairman and we are delighted that he will continue with us to ensure an orderly succession and the continued integration.

" Lloyds last month announced it is to cut 985 jobs at a business offering car finance over the next two years, the first major job losses from the merger.

 The government backed the Lloyds takeover of HBOS last September, bypassing normal competition rules to avoid the collapse of the Halifax owner.

Shares in the bank have dropped by 27% so far this year, closing at 89 pence on Friday.

Lloyds controls about 25% of British customers' personal bank accounts and about 28% of the mortgage market.

sourced from The BBC

Lloyds Bank chairman to step down

Sir Victor Blank is to step down as chairman of Lloyds Banking Group by June 2010.

Sir Victor has been chairman of Lloyds since 2006

Following a meeting with the board, Sir Victor said it was "the right time for the Group to appoint a new chairman".

Lord Leitch, who has been appointed deputy chairman, said the board was "very sad" at the decision.

Sir Victor and Lloyds' chief executive, Eric Daniels, have faced criticism for their decision last year to buy HBOS, the troubled owner of Halifax.

The UK Treasury owns 43% of Lloyds.

Sir Victor confirmed he was stepping down just before he went inside Lloyds' headquarters in the City of London on Sunday.

Sir Victor has jumped before he was pushed Robert Peston, BBC business editor Read Robert Peston's blog Lloyds sees HBOS loss of £10..

He told BBC business correspondent Joe Lynam that he "still had lots to do" and denied he was being forced to resign under pressure from shareholders.

In a statement released after the meeting, he said he would continue working until a successor was appointed "to ensure the successful integration of the two banks".

"This remains - in the medium term - a unique value-enhancing opportunity," he added.

Mr Daniels said Sir Victor had played a very important role "during a period of significant change for our company and at a time when there has been unprecedented volatility in the markets".

HBOS losses HBOS made a loss in 2008 of almost £11bn. But Lloyds TSB, as it was called, made a profit of £807m last year, albeit an 80% drop on the previous year.

The two banks together are expected to be in loss this year.

The government earlier this year agreed to insure £260bn of the bank's toxic loans, and to potentially raise its stake in the bank to 65% following the HBOS losses.

The deal was part of the Treasury's taxpayer-backed Asset Protection Scheme to insure banks' riskiest assets against further losses resulting from the credit crisis.

Lloyds' directors do not believe that Sir Victor would have been ousted by shareholders at the forthcoming annual meeting, according to the BBC's business editor, Robert Peston.

However, he believes that UK Financial Investments (UKFI), which manages the government's stake in financial institutions such as Lloyds and the Royal Bank of Scotland, was "acutely aware" of other shareholders' convictions that there had to be a change at the top of Lloyds.

"I am now persuaded that UKFI would have voted its 43% (that's taxpayers' 43%) against him staying on," Mr Peston said.

 'First-class chairman' Lord Leitch said the board "was unanimous in wanting Sir Victor Blank to seek re-election as chairman for another three years".

LLOYDS' TOXIC ASSETS 83% of the £260bn toxic assets came from HBOS 17% come from the books of Lloyds TSB Of the toxic assets, £151bn are in corporate and commercial loans £74bn comes from residential mortgages "We are very sad about Sir Victor's personal decision to retire, although we respect and understand his reasons for it," he said in a statement.

"Sir Victor is a first-class chairman and we are delighted that he will continue with us to ensure an orderly succession and the continued integration.

" Lloyds last month announced it is to cut 985 jobs at a business offering car finance over the next two years, the first major job losses from the merger.

 The government backed the Lloyds takeover of HBOS last September, bypassing normal competition rules to avoid the collapse of the Halifax owner.

Shares in the bank have dropped by 27% so far this year, closing at 89 pence on Friday.

Lloyds controls about 25% of British customers' personal bank accounts and about 28% of the mortgage market.

sourced from The BBC