The latest talks between Lloyds TSB Foundation for Scotland and the Lloyds Banking Group have failed to solve the  funding crisis that led the foundation to suspend grant-making for the foreseeable future.

Lloyds Banking Group had offered to provide the foundation with almost £25m in funding over the next four years, while permanently reducing the foundation's future share of profits by half. As part of the deal the group wanted greater control over where grants are made and the right to appoint its employees to the foundation’s board.

The foundation rejected the proposal as it said it would have halved its income in the long term.

Mary E Craig, chief executive of the Lloyds TSB Foundation for Scotland, said, "Regrettably, the Banking Group’s proposal has not changed substantially and remains unacceptable to the foundation on the basis of legal and financial advice that made it clear the proposal was not in the best interests of the foundation and, therefore, the charities we support. That continues to be the case."

Lloyds TSB Foundation for Scotland had proposed that the Banking Group loan them the proffered £25m "effectively as an advance", which would be repaid by the foundation over time. This would maintain funds available for charities and leave the percentage of profits the foundation receives untouched and ‘their independence intact’, the foundation said.

Craig continued, "The Banking Group did discuss our proposal but was not prepared to accept any part of it as a useful way forward. Whilst we understand that they are keen to reach one agreement with all four Foundations, Lloyds TSB Foundation for Scotland is governed by an independent Board of Trustees, who can only speak for Scottish interests".

A spokesman for Lloyds Banking Group said they "remain committed to a dialogue" with the foundation. "We believe it is very important that we offer the same solution to all four foundations and that is something we would like to see happen. We also remain focused on continuing to make significant donations in Scotland," he continued.

Craig said the foundation was "extremely heartened" by the support it received from charities and others who have urged them to "continue to stand up for what is right."