The Player: Banking on people to win

PERSONAL DETAILS: Aged 56. Lives in London during the week and Northamptonshire at weekends. Drives a BMW 7-Series. Outside work, his interests include music and theatre. He has played the violin since school and is a non-executive director of the Royal Philharmonic Orchestra and a trustee of the Royal Theatre, Northampton. Mr Ellwood was paid a total of pounds 739,000 in 1998, including a salary of pounds 475,000.

CHALLENGE: "It is about continuing to build on the success story that is Lloyds TSB," says Peter Ellwood. He is proud of what's been achieved and harnessing the skills and strengths of the workforce is "greatly exciting".

Lloyds TSB is operating in a highly competitive financial services market with newer entrants to the market such as Egg and Richard Branson's Virgin Group joining the traditional competitors of Barclays, NatWest and HSBC as well asnew distribution channels such as phone and Internet banking.

Mr Ellwood believes Internet banking will be "very, very big". But with 70 per cent of Lloyds TSB customers visiting a branch once a month, Mr Ellwood says the branch network is still very important. Mr Ellwood says the group has got to be offering customers the highest level of service and better products. Lloyds TSB, he says, is "extremely good in comparison to its peers in the way in which it deals with the ATM network". (Barclays was criticised for charging non-customers pounds 1 every time they use one of its cash machines.)

Mr Ellwood says Lloyds TSB has improved service with initiatives such as giving customers the chance to do their basic banking transactions in 15,000 post offices, particularly good for rural communities who may not have easy access to a bank branch. Lloyds TSB also has a strong phone banking business and a growing presence in supermarket and Internet banking.

CORPORATE BACKGROUND: Mr Ellwood is a career banker. He joined Barclays Bank in 1961 and rose over 20 years in retail and corporate sections. He spent eight years at Barclaycard in the 1980s including a stint as chief executive. In 1989, he joined TSB Bank, rising to group chief executive in 1992. After the 1995 merger with Lloyds, Mr Ellwood was deputy group chief executive. "Lloyds was a good house to join," he says. Mr Ellwood assumed the group chief executive's role in February 1997 from Sir Brian Pitman, who became Lloyds TSB chairman.

STRATEGY: Mr Ellwood says this is clear and focused on "overall maximisation of shareholder value over time". He identifies three strategic aims. The first is "to be a leader in our chosen market". This has led the company to sell 12 businesses that were not in the top three in their respective markets. Acquisitions have been made that further the aim of building market share. This was the rationale behind the purchase of the Cheltenham & Gloucester building society and the announcement in June of the proposed acquisition of Scottish Widows. This would combine the life, pensions, unit trust and fund management businesses of both Lloyds TSB and Scottish Widows.

The second strategic aim is "about being first choice for our customers by understanding and meeting their needs". Lloyds TSB uses a series of models to identify what products and services customers would like. The third aim is to "drive down day-to-day operating costs" so more can be invested in the business. Mr Ellwood estimates that by the end of 1999, Lloyds TSB will have reduced costs by pounds 400m.

Consolidation in UK financial services and globalisation of the industry is proceeding at a rapid pace. Mr Ellwood says: "We need to be world class in a few key critical areas." He identifies these as the way staff are managed, customer relationship management and the way change is managed. To keep up with best business practice, Lloyds TSB uses global benchmarking with international companies, not only in the banking sector.

He says 90 per cent of Lloyds TSB's business is in the UK and the focus is firmly on retail banking and there is "enormous scope to grow organically". But the group could participate further in the consolidation of UK financial services and Mr Ellwood is interested in overseas expansion, particularly in Europe.

MANAGEMENT STYLE: Mr Ellwood says communication is a key part of his role, "explaining to staff where we are going, why and how we get there". Mr Ellwood sees his role as the "restless pursuit of perfection". Despite the group's impressive recent trading performance, "I do not want any shred of complacency in this company".

MOST ADMIRES IN BUSINESS: Jack Welch of General Electric in the US for his "focused approach". Mr Ellwood says there is a lot of evidence that size "if managed really effectively, can lead to competitive advantages".

CITY VERDICT: There is great admiration in the City for the transformation of the group's fortunes under Sir Brian Pitman and Peter Ellwood. The share price has risen by more than 40 per cent in the four years since the Lloyds TSB merger.

An investment of pounds 1,000 in Lloyds TSB shares on 1 January 1996, with dividends reinvested each year, was worth pounds 2,800 at the end of 1998 - a compound growth rate of 41 per cent per annum. This performance puts the company among the best in the world in terms of creating value for shareholders. At the interim results announcement in June Lloyds TSB increased the dividend by 21 per cent to 8.1p per share.

Rumours that cash-rich Lloyds TSB is thinking of another large acquisition, has knocked back the share price recently. City analysts fear any rival bid for NatWest, the subject of competing bids from The Royal Bank of Scotland and Bank of Scotland, would fall foul of the competition authorities because of the dominant position the two banks have on the high street. Other possible aquisition targets for Lloyds TSB are currently suggested to include Abbey National and the Woolwich.