Tory peer Lord Lupton to chair Lloyds unit as ring-fencing looms
The former Tory treasurer will be named this week as the first chairman of Lloyds' non-ring-fenced bank, Sky News learns.
By Mark Kleinman, City Editor
A Conservative peer and leading City dealmaker is to join the board of Britain's biggest high street bank – just days before the Government sells the last chunk of its £20.3bn stake in the lender.
Sky News has learnt that Lord Lupton is to become the first chairman of Lloyds Banking Group's non-ring-fenced bank – the division being set up as part of industry reforms aimed at containing the fallout from a future financial crisis.
Lord Lupton, who is the chairman of the investment bank Greenhill Europe and a former Tory treasurer, will also join the main Lloyds board as a non-executive director, according to City sources.
The appointment, which will be announced in the coming days, will represent a crucial piece in the jigsaw of Lloyds' preparations for ring-fencing – the new structural regime due to come into force in 2019.
Lord Lupton, a long-standing Conservative donor, is among the most prominent names in the City, having held roles at Barings before co-founding Greenhill's London operations in 1998.
His arrival at Halifax-owner Lloyds will also be notable, however, for a number of other reasons.
He will be the second Tory peer on the bank's main board, alongside Lord Blackwell, the pro-Brexit chairman of Lloyds.
And his appointment will be announced just days before the Treasury is expected to hail the full disposal of a taxpayer shareholding in the bank which once stood at 43% of its shares.
Philip Hammond, the Chancellor, said last month that the Government had finally broken even on its stake in Lloyds, recouping more than £20.3bn in share sales and dividends.
Its stake is now down to 0.89%, the company said last week – and the sale of the final remaining shares is likely to take place in the next fortnight, marking a milestone for the UK's post-crisis banking sector.
The non-ring-fenced operations that Lord Lupton will oversee at Lloyds represent a much smaller fraction of its overall balance sheet than those of rivals Barclays, HSBC, Royal Bank of Scotland and Santander UK.
Ring-fencing – a concept devised by Sir John Vickers' Independent Commission on Banking in 2011 – is designed to shield taxpayers and ordinary depositors in the event of a future crisis by creating a clearer separation between groups' retail and wholesale operations.
Last November, Lloyds appointed Mark Grant as the chief executive of its non-ring-fenced bank, which will house some of the derivatives trading and non-UK activities conducted by Lloyds on behalf of clients.
Lloyds' high street banking operations – the vast majority of its business – will sit within its ring-fenced bank.
In recent weeks, Lloyds has also applied for permission to set up a new European hub in Berlin in order to deal with the consequences of Brexit.
Lord Lupton is expected to recruit a number of other independent directors to the non-ring-fenced unit's board.
Barclays – in the form of Sir Ian Cheshire – and HSBC, which recruited Dame Clara Furse, have also turned to established City figures to aid their ring-fencing plans.
Lloyds declined to comment on Monday, while Lord Lupton could not be reached for comment.