Lloyds TSB Group PLC is starting an overhaul that may include selling its Scottish Widows insurance and fund management.
Mike Ross, the head of Scottish Widows, said Friday in an interview from his office in Edinburgh that the review involves all Lloyds TSB businesses.
Shares of Lloyds TSB have dropped 27% since it bought Scottish Widows for $11.1 billion in March 2000 when global stock markets were peaking. The London company became Britain's largest bank by market value when it merged with TSB Group in 1995 but is now No. 5, lagging such lenders as HSBC Holdings PLC and Royal Bank of Scotland Group PLC.
Eric Daniels, a 51-year-old American who succeeded Peter Ellwood as chief executive last month, declined to comment. He is focused "on getting the core business operating really well, and then to grow and develop from there," spokeswoman Mary Walsh said. Lloyds TSB is scheduled to report first-half earnings on Aug. 1.
Lloyds TSB said last month that it might sell National Bank of New Zealand Ltd., that country's biggest lender, and according to Financial Times it has been seeking a buyer for its Brazilian business. Analysts say Lloyds TSB could fetch about $4 billion for the New Zealand unit.
Mr. Daniels has said he wants to focus on improving its U.K. business after earnings fell 40% in the second half of last year to $1 billion and the bank froze its dividend for the first time in at least 21 years.
Last year Lloyds TSB earned $1.86 billion before taxes from consumer and mortgage banking in Britain. Profit from life insurance, pensions, and mutual funds fell 38%, to $756 million in 2002, in part because of lower asset management fees and costs to compensate clients who were badly advised when they bought savings products.
"Scottish Widows has been a problem for Lloyds ever since they bought it at the top of equity market," said James Leal, an analyst at Gerrard Ltd., a London company that oversees about $22 billion for clients and holds shares of Lloyds TSB.
Lloyds TSB is "consigned to the second league," said Colin McLean, managing director of SVM Asset Management in Edinburgh, which has about $1.6 billion of assets and holds Lloyds TSB shares.
"The Scottish Widows purchase was spectacularly badly timed," he said.
