Lloyds Banking Group cancels covenant with Scottish foundation

Fundraising | Gareth Jones | 24 Feb 2010

The Lloyds Banking Group has moved to cancel its covenant with the Lloyds TSB Foundation for Scotland, initiating a nine-year notice period.

The Group has also refused to ratify the trustees’ decision to reappoint Christine Lenihan as the Foundation’s chair.

The Scottish foundation had refused to agree to new deal which would have seen its share of the bank’s profits halved, and the Banking Group given a say on where grants would be allocated.

The Banking Group argued that recent mergers meant the old amount, of 1 per cent of profits to Lloyds foundations across the UK, would be too great a proportion.

Mary Craig OBE (pictured), chief executive of the Foundation, described the cancellation of the covenant as “an act of determined vandalism”.

On the refusal to ratify Lenihan, she said: “This is the first time in the Foundation’s history that this has happened and, although we have asked, the Group has refused to give us its reasons.”

She added: “Whilst they are legally within their rights to do both, morally it is hard to see either action as anything other than a vindictive attempt to punish us for not agreeing to their proposal to cut our funding and reduce our independence.

“Regrettably, it is in keeping with the bullying and aggressive behaviour displayed by the Group’s representatives at each stage of this process.”

“Door remains open”

The Group has stated that it will set up a new grantmaker, the Bank of Scotland Foundation, though a spokesman for the confirmed that its revised funding offer to the existing foundation remains on the table.

“We have worked very hard to try and reach an agreement with the Scottish Foundation. Regrettably, we have been unable to do so at this time.

“Under the terms of the current covenant, the Scottish Foundation will continue to receive significant funding from the Group over the next nine years, which will continue to benefit Scottish charities.

“We are fully committed to supporting communities throughout Scotland and our door remains open to the Scottish Foundation.”

Directory: Lloyds TSB Foundation for England and Wales
Who's Who: Mary Craig

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