MOODY'S CONFIRMS RATINGS OF LLOYDS BANK (SENIOR AT Aa2), TSB BANK (SENIOR AT Aa2), CHELTENHAM AND GLOUCESTER (SENIOR AT Aa3) AND LLOYDS TSB GROUP (SENIOR AT Aa3)
London, 9/25/1996 -- Moody's Investors Service confirmed the deposit ratings, senior debt ratings and the financial strength ratings, of Lloyds Bank plc at Aa2/Prime-1/B+, of TSB Bank plc at Aa2/Prime-1/B+, and of Cheltenham and Gloucester plc at Aa3/Prime-1/B. The Aa3 senior long-term debt rating and A1 subordinated debt rating of Lloyds TSB Group plc, the ultimate holding company of the three banks, were also confirmed. These confirmations followed the publication of the recommended proposal for Lloyds Abbey Life plc, currently 62.4% owned, to become a wholly-owned subsidiary of Lloyds TSB Group plc.
Moody's said that proposal, which is to be effected by way of a scheme of arrangement, and which remains subject to shareholder approval, valued the 37.6% of Lloyds Abbey Life not already owned by Lloyds TSB at œ1,675 million. Under the terms of the proposal, the consideration is to be discharged by a combination of shares in Lloyds TSB Group plc and cash. The agency noted that the relative weighting of cash and shares will be partly dependent upon the choices made by the minority shareholders.
The Lloyds Abbey Life group was created in December 1988, when Lloyds Bank merged five of its businesses with Abbey Life. Since the merger of Lloyds Bank and TSB Bank in 1995, the group has operated a number of insurance and finance businesses side by side. By taking its holding in Lloyds Abbey Life to 100%, Lloyds TSB should be in a position to manage its portfolio of insurance and finance businesses more cost efficiently and effectively. At the same time, Moody's said that the use of cash to finance the proposal would have a significant negative impact on the group's consolidated capitalization, and that it would also raise the gearing of the holding company. However, Moody's believes that strong internal capital formation should help restore the group's capitalization. Moody's added that longer-term it expects the Lloyds TSB Group to pursue its clearly focused growth strategy without significantly hampering its financial strength, including its capitalization.
The following ratings were confirmed: Cheltenham & Gloucester plc -- the long-term bank deposits and senior debt ratings of Aa3, the subordinated debt rating of A1, the bank financial strength rating of B, and the Prime-1 rating of the bank for its short-term deposits and its commercial paper. Lloyds Bank plc -- the long-term bank deposits rating of Aa2, the long-term subordinated debt rating of Aa3, the bank financial strength rating of B+, and the Prime-1 rating of the bank for its short-term deposits and its commercial paper. Lloyds TSB Group plc -- the long-term senior debt rating of Aa3, the subordinated debt rating of A1. TSB Bank plc -- the long-term bank deposits rating of Aa2, the bank financial strength rating of B+, and the Prime-1 rating of the bank for its short-term deposits.
Lloyds TSB Group Plc, headquartered in London, reported total assets of œ134 billion (approximately $208 billion) at 30 June 1996.
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