A final decision will not be taken until next spring. However, Lloyds has been experimenting with joint Lloyds-TSB branches in a number of locations up and down the country and has been impressed by the results.
Peter Ellwood the Lloyds-TSB chief executive, said: "If they [the pilot schemes] continue to be as successful as they have been, the likelihood is that we will rebrand."
Since Lloyds bought the TSB group in December 1995, around 300 branches have been closed. The group but has continued to keep the brands and the branch networks separate because of fears that it may alienate loyal customers.
But, Mr Ellwood said, customer attitudes have shifted in the three years since Lloyds bought TSB. Most customers surveyed recently said they were more concerned about the quality of service and the convenience of branch locations than whether it was a Lloyds or TSB bank.
However, there are no plans to do away with the Cheltenham & Gloucester brand, Mr Ellwood said. The C&G is now the sole supplier of mortgages within the group, with a pounds 40bn lending book. It has 230 branches.
"The brand is so powerful. Its share of net new mortgage lending is 13.2 per cent. It is punching above its weight," Mr Ellwood said. Lloyds-TSB is now three-quarters of the way towards achieving its target of pounds 400m cost savings before the end of 1999.
Mr Ellwood said Lloyds was keen to make a big acquisition, but the bank was not interested in a rival clearer. "There are quite heavy regulatory issues with everything very big," he said.
"We have made no secret that we think that if the market consolidated further we would be interested in both a mortgage provider and an insurance provider."
Mr Ellwood said the bank had not ruled out a bid abroad. However, he pointed out that outside the UK, a bidder is expected typically to pay a 20-30 per cent premium which is difficult to justify if you cannot move quickly to cut costs.
"We've not restricted our examination to the UK," he said. "But [in Europe] they have very low returns on equity and very low labour flexibility."Reuse content