The ratings on Lloyds TSB Bank PLC (Lloyds TSB) reflect its strong profitability, good asset quality, and the strength of its franchise in the U.K. financial services sector. Lloyds TSB--which includes Cheltenham&Gloucester PLC (C&G; not rated) and Scottish Widows PLC (Scottish Widows; not rated)--is among the largest U.K. retail financial services groups, and is a leading player in the residential mortgage, personal and business banking, and life and pensions markets. Core capitalization is weak by Standard&Poor's measures, however, even allowing for the relatively low risk of many parts of the group. Core capital flexibility has declined in 2002. Standard&Poor's analysis of capital looks beyond Lloyds TSB's strong regulatory capital ratios by taking account of
