<<< back LTU campaigners give profit warning… [24 May 2004] LTU petitioners joined Lloyds TSB shareholders at the Bank’s Annual General Meeting at the SAS Radisson Hotel in Glasgow on Friday 21st May and received strong support from those attending. Steve Tatlow, Assistant General Secretary reported that the majority of shareholders had signed the Union’s petition. He went on to say, "Most shareholders going in to the meeting have signed our petition and taken campaign leaflets. Our survey of members showed that 91% wanted us to launch this campaign and we have had massive support ever since." To prove the point over 360,000 signatures have been collected in the six months since the campaign was launched. Press Coverage LTU activities attracted extensive press coverage. The Financial Times, The Guardian, The Scotsman and The Chronicle in Newcastle all reported on the positive response the Union’s campaign has received. The Scotsman reported… Lloyds TSB in AGM storm over offshoring of Scottish jobs Lloyds TSB came under attack at its annual meeting in Glasgow yesterday, as shareholders and employees demanded clarification of its dividend policy, and the potential "offshoring" of Scottish jobs. Over the past few months, the bank’s generous dividend policy and low earnings growth has prompted analysts to suggest that declining cover would force a cut in the payout. However, chairman Maarten Van der Bergh, said: "The dividend is not in danger. We strongly believe that our organic growth strategy will restore the dividend cover. We are quite satisfied with our dividend policy." During the past year, Lloyds has sold a number of its businesses - including the Bank of New Zealand for £2.25 billion as well as most of its South American assets - and shareholders had hoped some of the income would be returned to them via a share buy-back. But this option was ruled out earlier this year, with chief executive Eric Daniels favouring a continued focus on existing UK operations along with the flexibility to make acquisitions. Daniels has reorganised the bank and appointed new heads for insurance, corporate and retail units to try and get higher returns from the bank’s UK business. However, the reorganisation strategy included "offshoring" 1,500 UK-based jobs to India by the end of the year, prompting angry protests from the Lloyds TSB Group Union outside the AGM yesterday. Steve Tatlow, Assistant General Secretary of the union, warned that nearly 50 per cent of the Lloyds’ customers would consider changing banks if jobs were moved to India, with only 0.5 per cent of customers needing to make the switch to erode the potential cost savings of offshoring. He said: "It might bring short-term cost savings, but it’s not in the interests of shareholders and it’s certainly not in the interests of customers." Shares in the bank closed marginally up at 424.5p. Recent Surveys warn of possible customer revolt… The results of a series of surveys by leading independent researchers have all pointed to the risk of customers switching to those banks that have insisted they will not offshore work abroad. These include Royal Bank of Scotland, Nat West, Halifax Bank of Scotland, Alliance & Leicester, Nationwide and Co-operative Bank. A Survey by YouGov (for Alliance & Leicester) found that 87% of people would not be happy to have their bank account or other financial products serviced by staff in an overseas call centre; ICM Research (on behalf of leading analysts, ContactBabel) found that one in seven Britons who have knowingly used an overseas call centre have responded by taking their business elsewhere. MORI (carrying out an independent survey for LTU) found that 49% of Lloyds TSB customers would consider moving to another bank rather than have their account managed in India. DTI Study reveals concern over profitability… A recent study by the Department of Trade of Industry reported that those companies who ‘offshore’ work risk losing many customers. Amongst its key findings were that “UK customers have a negative attitude towards offshoring”; that customer service was significantly better in the UK with “the vast majority of calls dealt with successfully first-time by UK contact centres; a far higher proportion than is managed in Indian contact centres”; that “the success or otherwise of offshoring is yet to be proven”; that the “compromising factor with offshoring is cultural fit”; and most important in the context of other recent independent research, that… “there is a schism developing between those financial services companies which are pro-offshoring and those which have rejected it for the time being. This situation can be viewed as indicating that the flight offshore is not yet a given, and will in the end be determined by consumer experience” (DTI Study, May 2003) To carry on with offshoring regardless of the wishes of customers therefore puts Lloyds TSB at risk of losing many customers and thereby undermining its profitability and returns for shareholders. <<< back

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