Lloyds bank is a well-known British financial institution that act some fraud cases which create major issues as well as challenges in front of them.
- Describe current scenario of Lloyds banking group as well as issues that may arise due to acquisitions of HBOs.
- Analyze requirement of implementing different theories and framework for preventing measures.
- Provide recommendation that requires to take in consideration by Lloyds banking group.
Corporate governance is considered as a procedure by which the organisations can be managed and controlled. The problems associated with the corporate governance are considered as the problems that are currently on a wider basis (Guinnane, Harris and Lamoreaux, 2017). It is because of some factors such as increasing rate of corporate fraud, collapse, irresponsible of the management power, etc. Along with these factors, various models and theories have been initiated that can help in providing a sort of relaxation to these frauds and factors that are leading some loss to the operations and functionality that are being involved in different factors of corporate governance. The report is about discussing the fraud case of Lloyds bank and analysing the issues because of which the bank had to face those problems. Also, the use of various frameworks or theories in order to provide some preventive factors have also been included.
Due of the acquisitions of HBOs occurred in the year 2008, it has been analysed that it has impacted quite negative on the Lloyds bank. It has been analysed that the incident has been disastrous enough for Lloyd bank as it put the bank in enormous number of losses. Also, after the incident happened, it was observed that the proximity of HBOs was not true enough, but it made various losses to the Lloyds bank. Also, it can be considered that the management of Lloyds bank must be responsible for having an ineffective board because if it would be strong and effective enough, it might not have turned out to be this much disastrous (Chiu and McKee, 2015). For preventing such issues, various initiatives have been developed and a very common example of this can be considered as the theory of corporate emergence. There are various theories that have been developed in order to resolve the issues associated with it. Lloyd's bank can also make involvement of these theories and frameworks because these can actually help them to maintain a balance between the functionality and operations of the bank.
It helps in making an analysis at an efficient level so that all problems can be evaluated and on the basis of that, specific preventive measures can be used. By the means of corporate theory of emergence, it helps in making an understanding of various practices and processes of the corporate governance. Although there are some limitations of the model as well, it has proved successful enough in analysing the operations and functions of the corporate governance at a much wider level (Sikka and Stittle, 2017). Four basic factors of the corporate governance includes stewardship, finance, stakeholders and political factors.
As in case of Lloyd’s group, the system also achieves the basic corporate roles and these involve the board of directors, induction by them, committees and the shareholders. It is because; these bodies are considered as the essential one that helps in maintaining the structure of the whole group in an effective and an appropriate manner (Gullifer and Payne, 2015). It is important to note that the actual focus of the corporate governance is to facilitate the prudent and effective management of Lloyd’s bank. But a fact that is to be ensured here is that the role of corporate governance somehow differs in case of financial and non financial sectors. As an example of the Lloyd bank, organisations like this pose a higher rate of risk as compared to the non financial firms to economy.
So, it should be ensured that it accomplishes all the important and required factors required for maintaining a balance between different functions. As the acquisition of HBOs in the year 2008 proved destructive enough for the Lloyd bank, it might not have happened if the essential factors had been considered in an effective way. It is because in terms of the corporate governance, committees along with board of directors play a major role (Ahmed, 2015). It is because as in case of Lloyd’s bank, the board of directors become responsible for developing and implementing the corporate principles in bank and that too in a way that it seems efficient enough for the bank to achieve all the targets and goals at a much faster rate.
Another important factor that is to be managed by Lloyds bank is to manage the risk. Because of the imbalanced or improper structure of the banks, they might have to overcome all risks and barriers and that can also have an impact on the productivity and popularity of bank. So, Lloyd bank can ensure to have a proper risk management system so that at the time of occurrence of some barriers, the bank might be able to overcome that. Also, it will further help the bank to sustain its productivity as well as popularity rate (Lewis, Lloyd-Jones and Matthews, 2016). There are five types of risks that can affect the financial sectors such as Lloyd bank and it involves liquidity, operational, solvency, credit and interest. So, in order to prevent themselves from any sort of factor that can act as a challenge or barrier to the bank, Lloyd bank can ensure to involve the methods and strategies in an appropriate manner.
It can be concluded from the report that corporate governance can provide various means to Lloyd bank that can help them in a smooth and easy processing of all operations and functions. The theory of corporate governance emergence has also been included in the report that involves the effectiveness and evaluation of the factors that should be ensured by the Lloyds bank in order to attain an efficient rate of popularity as well as productivity. Therefore, it helps in analysing the effectiveness of involving features of corporate governance in an appropriate manner and its influence on Lloyds bank.