Lloyds pension scheme slumps into deficit

The news, expected as part of the group’s third-quarter results on Wednesday, mean the still partly state-owned lender will become the latest FTSE 100 giant to be sucked into Britain’s pensions crisis.

Other major high street players such as Barclays and RBS have already seen their pension scheme’s slump into the red, but the apparently healthy Lloyds pot had posted a £430 million surplus as recently as the end of June.

However, turmoil in bond markets caused by the Brexit vote are expected to have eroded that surplus, putting pressure on Lloyds’ capital position which could force it to pay out a lower than expected dividend this year.

The Bank of England’s decision to cut interest rates in response to the EU vote has slashed bond yields, hitting major UK pension schemes hard.

Ahead of the anticipated bad news from Lloyds, Citigroup analysts have forecast the pension deterioration could force the lender to take a £1.2bn capital charge this week.