A COURT decision ordering Lloyds Banking Group to pay £3.5 million to the Lloyds TSB Foundation for Scotland has been welcomed as “great news” for charities in the Borders, where groups such as Duns Youth Centre, Coldstream Community Trust, Interest Link Borders and Face2Face Borders Ltd have all benefited from funding from the foundation over recent years.
The foundation raised an action in the Court of Session against the Lloyds Banking Group, following a dispute over the money it was due from the group under the terms of a covenant entitling it to a share of profits.
As the financial crisis spread across the banking sector Lloyds TSB predicted back in 2009 that there would be virtually no money due to the foundation in 2010 and they had to put all applications on hold. Discussions between the bank and foundation continued but the terms that the bank wanted the foundation to agree to were unacceptable to foundation trustees because of how much they would change the covenant.
At the time Mary Craig, the foundation’s chief executive, said: “Our legal and financial advisors have informed us that what has been offered is not in the best interests of the foundation and that trustees should, therefore, not agree to this.”
The foundation – which last year made 10 grant awards, totalling £50,748, to charities in the Scottish Borders Council area – is entitled under the covenant to a share of one per cent of the banking group’s pre-tax profits on an annual basis.
Last year it mounted a legal challenge against the banking group’s re-interpretation of the covenant as a result of which Lloyds had claimed the foundation was due only £38,920, while the foundation maintained the correct sum was more than £3.5 million.
After the first hearing a judge – Lord Glennie – ruled against the foundation but, last month three appeal judges overturned that decision and ordered Lloyds Banking Group to pay £3,543,433 million to the foundation.
Welcoming the recent decision, Mary Craig, said: “This is great news for Scotland’s hard-pressed charities at a time when many are struggling.
“The court’s decision is extremely welcome and shows that the foundation’s trustees were right not to accept the original finding.
“Since 1985 the foundation has made more than 12,000 awards, totalling almost £85 million, to charities in the Scottish Borders and across Scotland, and since 1997, we have allocated around £30 million to support charities – and therefore jobs – in the charitable sector.
“This decision will help us considerably to carry on with our work supporting charities throughout Scotland which are clearly focused on improving the quality of life for people who are disadvantaged or at risk of becoming so.”
Charities who may be interested in applying to Lloyds TSB Foundation for Scotland for an award should contact the foundation on 0131 444 4020 for more information.