Another day and another tale of breath taking bankers arrogance and selfish pursuit of "profit at any cost" hitting the poorest and most marginalised of society. Details emerge in todays Sunday Times on the 'new covenant' that the Lloyds banking group is attempting to foist upon Lloyds TSB Foundation in Scotland.

The foundation, which is the largest independent grant giving foundation in Scotland, was set up as part of the deal to float the TSB in 1985. It is governed by an act of covenant that sees 1% of the Lloyds banking groups pre-tax profit distributed to good causes via the foundation, and it's sister foundations in Ireland, England and Wales.

This arrangement was set up by an Act of Parliament and since then the foundation has supported a huge range of causes - many of which would not get funding from other sources - and distributed many millions of pounds in the process.

Of course, the downside of this arrangement is that it means that when Lloyds makes no profits, the foundation gets no cash, and charities all over Scotland miss out on the grants. The credit crunch, and it's impact on Lloyds banking group, has forced the Lloyds TSB foundation to close the doors to new applications this year.

However, one would hope that the lack of profits at Lloyds is a temporary problem (certainly judging by the extortionate new overdraft charges they're bringing in at new acquisition Bank of Scotland). As we see banks returning to profit, and the business as usual bonus culture return among the 'supermen' of canary wharf, it is absolutely appalling to see the fat cats, bailed out by public cash, at the top of Lloyds refusing to make any kind of deal with the charity for this year - unless they agree to a change in that convenant. And what a change. 

It will see the proportion of the profits of the Lloyds banking group that the foundation receives halved forever - and if that wasn't enough - Lloyds banking group also want to direct a proportion of the money donated to support corporate goals. That's right - half your money and you're losing your independence. To put that in perspective, it's estimated that the deal Lloyds banking group are offering would take £22million out the Scottish voluntary sector over the next 10 years. Relations are so bad that the foundation has had to go public, and on the very front page of their website there's a statement that gives some indication of their frustration: 

"As you would expect, we have been engaged in ongoing discussions with Lloyds Banking Group in London to explore a range of options on how best to enable us to continue our work until the Group returns to profit. But, to date, these have failed due to the Group seeking to tie the offer of a funding package for the next four years to a reduction in the terms of the covenant through which we get our income and a loss of the Foundation’s independent status. A counter offer by the Foundation five weeks ago has not had a response to date."

What kind of arrogance is required in the Lloyds banking group board room to think that after the bank bail-out, after all the public subsidy - that they then have the right to blackmail the foundation, and alter a covenant set-up by an act of parliament in the interests of a large corporation?

Oh yes - and in the Herald it would appear that the bank might be illegally excluding the foundation from participating in rights issues. Could it be that the bank owes the foundation £2million? The whole sorry mess is immensely depressing, as yet again it is the poorest and most marginalisedand who will lose out.

For all the rhetoric about 'Corporate Social Responsibility' we hear from the large corporations that control so much of our lives, it's clear that Lloyds have strayed a very long way from the aims of the original founder of the Trustee Savings Bank Movement, the Reverend Henry Duncan, who originally set up the TSB in Dumfriesshire in 1810 with the aim of helping the poorest and most marginalised of his poorest paritioners.

But the really strange part is this. The government owns a majority stake in Lloyds Banking group. If ever there was an indication of the absymal lack of leadership from Labour, it's the fact that the Lloyds TSB Foundation chiefs have had to go public on this at all. Alistair Darling, make a phone call, for goodness sake.