UK – Banking giant Lloyds TSB says it has reached agreement with scheme trustees over how to tackle its £1.5bn (€2.2bn) pension fund deficit.

It reckons to eliminate the shortfall within around 10 years.

“The group has recently reached agreement with the Lloyds TSB Group pension schemes' trustees to fund the schemes' actuarial deficit of £1.5bn over a period of 10 years,” the bank said in a statement.

“We also expect to continue to make additional voluntary contributions and, if the group's total deficit contributions remain at broadly the same level as in recent years, we would expect to see the accounting deficit (£2bn, net of tax) eliminated over a period of approximately 10 years, and the actuarial deficit over approximately six years.

The comments came in a trading statement today in which it said it expects to “deliver a strong trading performance for the first half of 2006 and to continue to deliver satisfactory earnings growth, pre-volatility, as a result of further progress in its key strategic priorities”.

It said its Scottish Widows Investment Partnership asset management arm had “delivered a good increase in the level of net new business inflows which, combined with more favourable year on year equity markets, has supported good profit growth”.

“We are delivering against our financial goals whilst investing in the long-term growth of our business franchises,” said chief executive Eric Daniels.

“We expect that the result of building better businesses will be sustained economic profit growth. The group remains on track to deliver a satisfactory performance for the first half of 2006.”