The chief executive of the bank is preparing a new strategy that will expand its ambitions in property, wealth, commercial and investment banking as he looks to shift the lender into growth mode after years of retrenchment.
Charlie Nunn has been working on his first strategic update since taking over. The British economy has rebounded faster than expected, freeing up more capital, as the former HSBC executive who succeeded him at Credit Suisse has a war chest of over four billion dollars.
People familiar with the deliberations said Nunn is considering quadrupling the budget of the new private home rental market brand, to an initial $1 billion. The number could increase further.
Low interest rates and competition from fintech are squeezing the income of traditional retail banking and lending at Lloyds.
The market shares of the company in the UK mortgage and credit card industries limit its opportunities to grow organically. Its latest annual report shows that it has a 19 per cent share of British SME lending.
Everyone thinks of Lloyds as a big retail bank, only a large mortgage provider, but it also has great commercial, corporate and insurance arms.
The person who is the Lloyds Insider.
Nunn wants to focus on building out the commercial bank, as well as currency trading, insurance and wealth management, areas where Lloyds lags domestic rivals.
One person with knowledge of the plans said that everyone thinks of Lloyds as a big retail bank, only a large mortgage provider, but it also has great commercial, corporate and insurance arms. It has more client touch points than Amazon, who have a cross sell.
The growth plan would mark a reversal in the strategy of the bank, which was forced to scale back its presence in commercial and investment banking after the 2008 government rescue.
The bank declined to comment.
The Financial Times reported that the bank had set a challenge of owning 10,000 residential rental properties by the end of 2025, with a further aim to reach 50,000 by 2030. The first target means that Citra would have a balance sheet worth about $5 billion and generate about $300m in pre-tax profit.
Nunn is going to increase funding to expand the business. In October, the bank's chief financial officer called the area an "exploratory exercise" and played down the bank's ambitions in the area.
Nunn plans to build out the UK wealth management business by focusing on digital services for mass affluent customers, such as doctors and lawyers with up to $1m in invest, rather than the ultra-rich, according to people familiar with the plans.
Since it was announced, the joint venture has posted disappointing growth. The overall wealth and insurance customer net inflow slowed last year. It is hoped that its relationships with 14m UK households will allow it to accelerate customer acquisition.
Financing the net zero transition is one of the areas of focus for the investment banking team.
Nunn worked for McKinsey before he became a bank teller, and he wants to see more cross-selling to commercial and corporate clients from the investment bank.
He wants to drive growth, expand risk appetite and geographic borders, according to a person familiar with the strategy. He sees the UK bank as a whole. It has a lot of international clients and needs to do more to support them.
It is the first time in a decade that the bank may have a significant presence in New York.
The share price of the bank has recovered about 30 per cent this year, but is still down by about a quarter since the start of 2020, and trades at a 30 per cent discount to the book value of its net assets.