Lloyds TSB Foundation for Scotland has called on Lloyds Banking Group to rethink its decision to appeal against a court ruling awarding over £3.5m to the Foundation.

Foundation chief executive Mary Craig Craig says: “This shameful turn of events means that monies due to us will be held back for a third year until this further appeal is heard and decided – and that is money we should be awarding to Scotland’s hard-pressed charities, now and in the future, as they are crying out for support at this difficult time. If we don’t have that income, we will be limited in what we can give by way of grants for the foreseeable future.”

The Foundation, which was set up in 1985 to support the local community, is entitled, under a  covenant, to a share of 1% of the Group’s pre-tax profits on an annual basis. However, in March last year, it was forced to mount a legal challenge against the Group’s re-interpretation of the covenant. Lloyds had claimed the Foundation was due only £38,920, while the Foundation maintained the correct sum was more than £3.5 million.

After the first hearing judge Lord Glennie ruled against the Foundation. But the Foundation appealed and, on 29 December 2011, three appeal judges from the highest appeal court in Scotland overturned that decision and ordered Lloyds Banking Group to pay £3,543,433 to the Foundation. However, Lloyds Banking Group is now appealing to the Supreme Court in London.

A spokesperson from Lloyds Banking Group defended the bank saying: “Lloyds Banking Group is proud of its track record as one of the largest corporate funders in the UK, including Scotland. Lloyds Banking Group has channelled over £82m over the last 25 years to the Lloyds TSB Foundation for Scotland, supporting their work in some of the most disadvantaged communities in the UK. In addition, the Bank of Scotland Foundation is now well established and we will remain committed to being one of the largest contributors to Scotland's charities for the long term."