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  • After years of international expansion that added scale and diversified the bank’s portfolio, Lloyds TSB, led by Sir Brian Pitman, recognized in the early 1980s that fewer than half of its businesses were earning their cost of capital
  • Sir Brian, with the support of his board, initiated a dramatic turnaround that not only reshaped the bank’s portfolio but also retooled the beliefs, culture and management practices across the company in pursuit of a singular objective – to maximize shareholder value


  • Looking beyond the bank’s UK peers to some of the best performing companies in the world such as Coca-Cola and Disney and General Electric, the bank set the goal of doubling the its market capitalization every three years
  • Sir Brian led the management team to systematically evaluate which businesses were capable of earning returns above their cost of equity and thus creating shareholder value, and which units could not, ether because they were in unattractive markets or because the bank had little chance of creating a leading product/service offer and cost structure
  • The bank refocused its portfolio on its strong UK retail banking business, pursuing expansion into related products such as insurance and mortgages with a goal of creating profitable lifetime customer relationships, building the first broad retail financial institution. As part of that, the bank acquired complementary insurance and mortgage businesses and also introduced a number of industry-leading product and channel innovations, such as interest-bearing checking accounts and internet banking
  • Funded profitable growth in retail by divesting value destroying businesses that could not be turned around, such as wholesale lending to governments and large corporations, international banking, merchant banking and currency trading. In doing so, the bank also reduced its risk profile and avoided many of the setbacks its peers encountered in the late 1990s
  • Instilled simple principles that led the organization to develop and commit to creative and valuable new strategies in each of its businesses by:
    • Staying focused on shareholder value creation and linking incentives to achieving that objective
    • Cultivating an environment that, in the words of Sir Brian “encouraged and required inquiry” and demanded that managers “dig down into the company and find which products and markets created value”
    • Requiring that businesses offer at least three viable strategic alternatives and adopt the most valuable one
    • Establishing governance processes that directed resources toward value-creating investments and away from value-consuming ones
    • Linking incentives to results


  • Between 1983 and 2001, Lloyds TSB doubled its value every three years, delivering annual total shareholder returns averaging 26% and increasing its market capitalization by a factor of 40
  • Sir Brian, who passed away in 2010, is widely regarded as the most successful banker of his generation. As chief executive and then chairman, he transformed Lloyds from the smallest of the original Big Four High Street banks to one of the largest and the most successful