Tory peer Lord Lupton to chair Lloyds unit as ring-fencing looms

(c) Sky News 2017: <a href="http://news.sky.com/story/tory-peer-lord-lupton-to-chair-lloyds-unit-as-ring-fencing-looms-10859833">Tory peer Lord Lupton to chair Lloyds unit as ring-fencing looms</a>
 

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 (LSE: BARC.L - news) , HSBC, Royal Bank of Scotland (LSE: RBS.L - news) and Santander UK (LSE: 44RS.L - news) .

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 (Swiss: BARC.SW - news) - 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.

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