* Bank has said independence would impact costs, taxes
* Lloyds could move parts of business back to London
* Impending vote creating uncertainty - chairman
* Bank's pay plan backed by shareholders
(Adds details of pay vote, chairman comments)
By Matt Scuffham
EDINBURGH, May 15 Lloyds Banking Group
is not currently preparing to leave Scotland if there is a vote
in favour of independence from the rest of Britain, the bank's
new chairman told shareholders at its annual meeting on
Chairman Norman Blackwell said there were too many
uncertainties for the bank to have made any decision.
"We are not at this point planning any moves because we
don't know what the result will be," he said. "If they were to
vote for independence we will seek to work with relevant
authorities to ensure we have a way forward to achieve our core
purposes of serving customers across the UK," he told the
meeting, which was dominated by the independence issue.
Scotland holds a referendum on Sept. 18 which could end the
country's 307-year-old union with England. Scotland's First
Minister Alex Salmond has said it would officially become
independent in March 2016 in the event of a 'yes' vote, giving
Lloyds 18 months to assess its options.
Lloyds, which owns Bank of Scotland and has its registered
offices in Edinburgh, has been stepping up contingency planning
in case Scots do vote for independence, according to banking
Lloyds has warned that a vote for independence will impact
its cost of funding, taxes and compliance costs.
Blackwell said the bank would work with the relevant
authorities in the 12-18 month period following a 'yes' vote to
decide the best course of action to take.
Edinburgh-based insurance group Standard Life has
already begun detailed preparations for a possible move of some
operations out of Scotland to minimise upheaval if Scots vote
Standard Life, based in Scotland for nearly 200 years, said
this week it would not hesitate to move parts of its operations
to England or register its funds there to protect its market
Banking industry sources have told Reuters that one option
for Lloyds could be to move the headquarters of its Lloyds and
Halifax businesses to London and operate Bank of Scotland from
Edinburgh as a foreign division of the business.
Lloyds and its rival Royal Bank of Scotland have
both been determined to stay out of the debate over
"It is clearly a matter for the Scottish electorate, the
bank does not have a corporate view set out but there are
clearly uncertainties created for everyone in advance of the
referendum," Blackwell told the meeting, where some 270
Prime Minister David Cameron is in Scotland for a two-day
visit to campaign against independence as the race tightens
ahead of the September vote. A TNS poll this week found that,
among those certain to vote, 35 percent would opt for
independence while 44 percent were opposed to it, narrowing the
gap between the two sides to nine points, its lowest since the
TNS poll began last September when the gap was 22 points.
Lloyds' plans to pay key staff bonuses worth up to double
their fixed pay were overwhelmingly supported by investors,
including UK Financial Investments (UKFI), which manages the
government's stake. 98.8 percent backed the plan.
Chief Executive Antonio Horta-Osorio reiterated the bank's
intention to ask Britain's financial regulator to allow it to
start paying dividends again in the second half for the first
time since it was rescued through a 20.5 billion pound
government bailout during the 2008/9 financial crisis which left
the government holding a 40 percent stake.
UKFI has begun selling the government's stake in the bank,
which returned to profit last year. The government is keen to
sell its remaining 25 percent stake before the election in 2015.
But uncertainty surrounding the Scottish independence vote,
could scupper those plans, banking industry sources said. UKFI
is unlikely to be able to sell shares in the weeks leading up to
the vote because of uncertainty over the outcome. This would
effectively rule out a sale for most of September, which had
been seen as a window of opportunity after the summer holidays
and before a close period ahead of the bank's third quarter
(Reporting by Matt Scuffham; Editing by Steve Slater and Jane