Lloyds Banking Group PLC’s defined benefit plans recorded collectively a deficit of £740 million ($959 million) as of Sept. 30, down from a net surplus of £430 million as of June 30 on adverse effects from credit spreads, Lloyds said in an interim financial statement.
As a result of market movements and the adverse impact of credit spreads, Lloyds reclassified the £20 billion worth of gilts within the pension funds’ liquidity portfolio to make them available for sale, the statement said.
“In the current low-interest-rate environment, we have decided it is no longer appropriate to commit to holding gilts to maturity,” the statement said.
A spokeswoman for Lloyds’ £38.2 billion pension funds was not available to comment by press time.
