Lloyds TSB is to launch a pan-European Internet bank as part of moves to shed its domestic UK bank image.
The bank will start online operations in Spain by the summer, before launching in Italy later in the year. It will then expand throughout the European Union, with regular start-ups in other countries. The online bank is the first move into Europe by Mr Peter Ellwood, chief executive. It is likely to run alongside a series of acquisitions in Europe, where Lloyds intends to grow quickly.
Lloyds declined to reveal the cost of the project but Halifax is spending £100 million sterling on its UK-only Internet bank, while Egg, the Prudential's banking arm, expects to lose £200 million by the end of the year. Lloyds is believed to be aiming for 1 million customers from outside the UK in the medium term, a fairly conservative target for a Europe-wide bank.
The figure compares with 800,000 account-holders acquired by Egg in 15 months, and the Lloyds UK website target of 1 million users out of a customer base of 15 million.
Mr Ellwood believes that without a larger European operation Lloyds is not an attractive partner for the larger US banks. Its main existing international operations are in New Zealand and Latin America.
The online bank has been under development in London since the summer but has no name as yet. Lloyds is understood to have considered e-bank, the name adopted for the online business in the UK. It is not clear whether it will be a standalone company, the approach taken by Halifax's Greenfield.co in the UK and Bank One's Wingspan Bank in the US, or integrated into Lloyds' management structure.
Lloyds confirmed it was developing a "European Internet offering" but would not say what form it would take. "It is still at the testing stage," the bank said. "We don't want to announce things that we then realise are not the best use of the project."
Until recently Lloyds had been seen as an Internet laggard, in spite of a rapidly growing number of web customers.
But last month the bank reorganised its executive team to help it deal with the net. If the European bank succeeds, it will propel Lloyds to the forefront of financial e-commerce.
