Top executives from Lloyds Banking Group are jetting to New York this week to set out to US investors their new strategy for restoring the bailed-out bank to financial health.
About 15% of the share register is already controlled by investors across the Atlantic, and António Horta-Osório, the bank's chief executive, intends to present the results of his strategic review to convince shareholders that he can turn Lloyds around.
On the 10th anniversary of the bank's listing on Wall Street, Horta-Osório will also tell US investors how he will revitalise the Halifax brand, which had been tarnished by the near-collapse of HBOS. He will make clear his determination to avoid selling off more branches than the 632 that have been mandated by the European Union.
He wants to prove to Sir John Vickers, who in his interim report on banking suggested that more needed to be done to enhance competition on the high street, that a new competitive force can be created under the EU proposals.
Vickers did not indicate how many branches might need to be sold. However, the bank last week received the backing of the chancellor, George Osborne, who appeared to indicate during an appearance before the Treasury select committee that he did not believe further branch sales would be needed.
The final Vickers report is due on 12 September, and this weekend Horta-Osório was quoted as saying a "very credible competitor" would be created. He will hope to fly to the US in the knowledge that some bidders for the 632 branches have already emerged – and overcome the difficulties of mounting a bid – as Monday marks an informal deadline for indicative bids.
Horta-Osório has conducted a review since taking the helm of the bank in March and will strip out 15,000 jobs to achieve £1.5bn of annual savings by 2014. These are on top of the £2bn in savings achieved through the takeover of HBOS by Lloyds during the banking crisis.
Accompanied by Tim Tookey, finance director, he spent last week touring the major City investors, which have endured heavy losses since the crisis. He will also need to explain to US investors that the bank must spend £2.3bn to achieve the cost cuts, as well as demonstrating how he intends to reach new return on equity targets of between 12.5% and 14.5%.
Winning the support of US investors could prove vital once UK Financial Investments (UKFI) decides to sell off the 41% stake owned by the taxpayer, which at Friday's stock market close was causing a £7bn paper loss for the government.
Horta-Osório has admitted that he sees his turnaround programme taking three years, and the City now believes that UKFI might sell down shares in Royal Bank of Scotland – which is further along the road to recovery – before those of Lloyds.
The final report from Vickers, which is also expected to outline ways to ringfence banks' high street deposits from riskier investment banking businesses, will be used as a barometer to judge when sales might be possible.
