The ratings on Lloyds TSB Bank PLC (LTSB) reflect its excellent business position, strong banking returns diluted by lower life assurance earnings, and stable asset quality. Notwithstanding LTSB's good regulatory ratios, core capitalization is weak by Standard&Poor's adjusted common equity (ACE) measures when adjusted for capital held in the life business. LTSB has an extensive franchise in the U.K. retail and corporate sectors. Its banking and general insurance profitability is very strong, supported by good cost efficiency, but organic revenue growth has been lower than peers over recent years. Following management changes in 2003, the reinvigoration of LTSB's franchise has become a strategic priority, and there were encouraging signs of progress in 2004. Its ability to sustain this
