Lloyds TSB is the UK's fifth biggest bank

The bank said in its trading statement that it would pay extra cash to close the funding gap over the next decade.

Lloyds TSB is the latest in a long line of major UK companies to divert cash into its pension scheme.

Many companies in the UK are facing pension scheme deficits due to a combination of rising life expectancy and investment underperformance.

Bad debts

In its trading update, Lloyds TSB said that expected to deliver a "strong trading performance" for the first half of 2006.

But it warned that bad debts among customers were still on the increase, although the rate of increase in bad debt had slowed when compared with the first half of 2005.

Richard Hunter, head of UK equities at Hargreaves Lansdown Stockbrokers, said the bank's comments on bad debt had tarnished an otherwise "robust" trading update.

"Lloyds TSB is one of the more exposed banks to the UK consumer and so the comments on retail bad debts are slightly troubling, even if the trend is slowing," he said.

In February, Lloyds TSB announced that retail banking profits fell 7% to �1.53bn for the full year, as more customers struggled to repay debts.