1 MAY 1992, Page 20

CITY AND SUBURBAN

Lloyds' chiefs run the risk of repeating their biggest mistake

CHRISTOPHER FILDES

The men who run Lloyds Bank chairman Sir Jeremy Morse and chief exec- utive Brian Pitman — make few mistakes, but when they make one, it is a corker. Their biggest so far has been a hostile bid for another British bank. This was Standard Chartered, with its overseas empire. Lloyds need only have asked nicely. Lord Barber, Standard Chartered's chairman, was sym- pathetic, and his finance director favoured the bid and worked for it. Instead, Lloyds went in feet first, waving its cheque-book around like a club — only to find itself completely outmanoeuvred in the market- place, beaten, and about to turn its back on overseas banking. The episode scored Lloyds no marks for strategic planning or tactical execution, only an E for Effort. This week's hostile bid for Midland revives memories which Lloyds might have hoped to live down. Midland after Sir Kit McMa- hon's departure looked about as defence- less as Standard Chartered had looked ear- lier, but Lloyds' approach served only to warm Midland's old flame in Hong Kong — the relationship that Sir Kit had first nurtured. When Midland accepted the Hongkong Bank's bid, Lloyds began a phony war. Its merchant bankers and a public relations firm hired for the purpose poured out a steady drip-feed of stories, some of them published with a credulity that they scarcely deserved. They could be read as charting a determined chief execu- tive's attempts to overcome resistance on his own board. The domestic battle won, he could turn his attentions to the enemy.