[holding answer 12 June 2009]: UK Financial Investments Ltd (UKFI) has been set up to manage the Government's investments in financial institutions as an active and engaged shareholder, operating on a commercial basis and at arms length from Government. This includes monitoring performance through maintaining an active and regular dialogue with investee companies' board to satisfy UKFI that the boards are operating effectively, and that companies' strategies protect and enhance shareholder value.
The framework document between HM Treasury and UKFI sets a requirement that UKFI will not intervene in the day-to-day management decisions of investee companies, with the companies retaining their own independent boards, which will manage the banks and determine their strategy. Closing branches is an operational decision for the Board of Lloyds Banking Group (Lloyds).
As part of the recapitalisation scheme announced on 8 October last year, the Lloyds has announced two new independent non-executive directors on 2 February. The purpose behind their appointment is to strengthen the board of the bank and to provide independent oversight in respect of governance and other matters in the interests of all the shareholders of the bank. They are not representatives of the Government.