Co-op named as preferred Lloyds branch buyer

 

Lloyds Banking Group today named the Co-operative as its preferred choice to buy the 632 branches it is selling under European competition rules.

The taxpayer-backed bank will now enter into exclusive discussions with the Co-op, which beat off competition in the auction from NBNK Investments, a takeover vehicle run by former Northern Rock boss Gary Hoffman.

The sale update came as Lloyds said chief executive Antonio Horta-Osorio would return to his job on January 9 after a period off work with exhaustion.

Lloyds is being forced to divest the branches because of the £20 billion in state aid it received following the 2008 financial crisis.

The assets being sold account for a 4.6% share of the UK current account market and up to 19% of the group's mortgage book. There are five million customers and an estimated 9,000 employees.

The disposal plan - dubbed Project Verde by Lloyds - is seen as a way of introducing a stronger challenger to the big five banking groups.

The bids by the Co-op and NBNK are thought to have been in the region of £1.5 billion, but the Co-op was seen as slight favourite because it already runs a sizeable bank.

It acquired Britannia in 2009 and currently has 343 branches and 6.5 million customers, including in current accounts, mortgages and credit cards.

Co-op chief executive Peter Marks said: "We think a combination of these branches and our own would significantly strengthen our position as a real challenger in relationship banking in the UK."

Virgin Money, which recently secured Northern Rock for £747 million, was also reportedly involved in the auction.

The decision to start exclusive talks with the Co-op did not involve Mr Horta-Osorio, who has been on leave since the start of November.

Lloyds said it completed a rigorous process, including independent medical advice, before deciding its chief executive was fit to return.

It has pledged to strengthen the roles of its senior management team to reduce the day-to-day pressures on Mr Horta-Osorio.

Group finance director Tim Tookey filled in as chief executive and the company lined up board member and former Barclays executive David Roberts as a potential stand-in if Mr Horta-Osorio's return was delayed.

Lloyds has until November 2013 to complete the Verde sale.

Mr Marks stressed the Co-op would only proceed with a deal if it was in the interests of its members and other stakeholders. It is mutually owned, with profits shared between members and also used to invest for the long term.

The Building Societies Association said it welcomed the potential expansion of the mutual sector in the banking market.

Director general Adrian Coles said: "Quoted banks often put the interests of shareholders above those of customers.

"All of our research shows that mutuals offer a better customer service - this change will markedly increase the number of branches in the high street that are more interested in customer service than shareholder return."

Business Secretary Vince Cable said: "If successful, the bid will create a substantial new presence on UK high streets for a mutually-owned bank with high ethical standards and a track record of good service to customers. This will boost competition and the choices available to both consumers and businesses.

Virgin Money will take a presence in the mortgage market for the first time as its Northern acquisition has fuelled hopes that it will be a stronger challenger to the dominant banks. It plans to launch current accounts in 2013.

PA

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: HR Benefits Manager

£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

Recruitment Genius: Office Manager / Financial Services

£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...

Jemma Gent: Year End Accountant

£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...

Jemma Gent: Management Accountant

£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...

Day In a Page

HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

Scientists hail daily pill that protects against HIV infection

Breakthrough in battle against global scourge – but will the NHS pay for it?
How we must adjust our lifestyles to nature: Welcome to the 'Anthropocene', the human epoch

Time to play God

Welcome to the 'Anthropocene', the human epoch where we may need to redefine nature itself
MacGyver returns, but with a difference: Handyman hero of classic 1980s TV series to be recast as a woman

MacGyver returns, but with a difference

Handyman hero of classic 1980s TV series to be recast as a woman
Tunnel renaissance: Why cities are hiding roads down in the ground

Tunnel renaissance

Why cities are hiding roads underground
'Backstreet Boys - Show 'Em What You're Made Of': An affectionate look at five middle-aged men

Boys to men

The Backstreet Boys might be middle-aged, married and have dodgy knees, but a heartfelt documentary reveals they’re not going gently into pop’s good night
Crufts 2015: Should foreign dogs be allowed to compete?

Crufts 2015

Should foreign dogs be allowed to compete?
10 best projectors

How to make your home cinema more cinematic: 10 best projectors

Want to recreate the big-screen experience in your sitting room? IndyBest sizes up gadgets to form your film-watching
Manchester City 1 Barcelona 2 player ratings: Luis Suarez? Lionel Messi? Joe Hart? Who was the star man?

Manchester City vs Barcelona player ratings

Luis Suarez? Lionel Messi? Joe Hart? Who was the star man at the Etihad?
Arsenal vs Monaco: Monaco - the making of Gunners' manager Arsene Wenger

Monaco: the making of Wenger

Jack Pitt-Brooke speaks to former players and learns the Frenchman’s man-management has always been one of his best skills
Cricket World Cup 2015: Chris Gayle - the West Indies' enigma lives up to his reputation

Chris Gayle: The West Indies' enigma

Some said the game's eternal rebel was washed up. As ever, he proved he writes the scripts by producing a blistering World Cup innings
In Ukraine a dark world of hybrid warfare and murky loyalties prevails

In Ukraine a dark world of hybrid warfare

This war in the shadows has been going on since the fall of Mr Yanukovych
'Birdman' and 'Bullets Over Broadway': Homage or plagiarism?

Homage or plagiarism?

'Birdman' shares much DNA with Woody Allen's 'Bullets Over Broadway'
Broadchurch ends as damp squib not even David Tennant can revive

A damp squib not even David Tennant can revive

Broadchurch, Series 2 finale, review
A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower: inside the mansion of Germany's 'Bishop of Bling'

Inside the mansion of Germany's 'Bishop of Bling'

A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower