Lloyds 'unlikely' to sell Widows

Lloyds Banking Group is likely to retain insurance subsidiary Scottish Widows following a strategic review of the business.

António Horta-Osório, the new chief executive of the 41% taxpayer-owned bank, had been expected to announce plans to offload the company when he sets out his objectives at the end of June.

Analysts suggested the move was part of wider plans to abandon the ‘bancassurance' model and focus on high street banking and mortgages.

But Horta-Osório (pictured) believes Widows' strong cash flows and strategic balance make it a valuable asset, reports Scotland on Sunday.

He also believes Widows can help rebuild the bank's relationship with its investors.

Meanwhile, City analysts said this weekend that Lloyds' recent appointment of Aviva's chief UK operating officer Toby Strauss as the bank's new group director for insurance suggested Widows would be retained.

Lloyds acquired Scottish Widows for £7bn in 1999. Despite a difficult period for markets shortly after 2000, Widows' robust cash flows allowed it to ‘repatriate' almost £2bn in capital to its parent group between 2005 and 2007.