Lloyds attacks ICB over call for branch sell-off

Lloyds Banking Group is on a collision course with the Independent Commission on Banking (ICB) after it recommended Lloyds should be forced into a mass sell-off of its branches.

The bank said the firm recommendation in the ICB's interim report came out of the blue and that it would battle to quash the proposal. Selling more branches could disrupt its current plan to dispose of 600 sites and their customers, it added.

Lloyds is seeking clarity from the Treasury within weeks so that it can make a clear offer to existing potential bidders and those who might enter the fray with more branches on offer. The ICB will not publish its final proposals until September, but Lloyds said that uncertainty could derail the bank's timetable to find a buyer by the autumn.

The European Union gave Lloyds until 2013 to sell the branches but Antonio Horta-Osorio, Lloyds's chief executive, speeded up the "Project Verde" plan when he arrived at the bank last month.

The Independent Commission on Banking argued yesterday that Project Verde "will have a limited effect on competition unless it is substantially enhanced". In a strongly worded statement, Lloyds said the sale of the branches would create the seventh-biggest British retail bank.

Mr Horta-Osorio said: "We are surprised that the interim report is proposing a potential expansion of Project Verde which we believe is not in the interests of our customers. This option appears to be based on limited evidence and may, paradoxically, delay a new competitor coming into the UK market."

Sir John Vickers, the ICB chairman, refused to put a number on the extra branches Lloyds should sell. The ICB said that the 600 branches would give a buyer 4.6 per cent of the current account market, which would be a small base for a new entrant to challenge the existing banks.

It also argued that the network for sale would have a weak balance sheet with a high ratio of loans to deposits. Raising funds to fill the gap would be tricky and expensive, the ICB said. Adding more branches to the sell-off could boost competition by reducing market concentration and strengthening the buyer as a challenger.

"These competitive pressures should lead to improved prices, products and choice for customers and to greater efficiency and innovation in the long run," the report said.

Lloyds bought HBOS in a rescue takeover in late 2008 in a deal that gave the combined bank about 30 per cent of the current account market. The Labour government waived competition rules at the time to save HBOS from collapse but the ICB yesterday criticised the decision. It stopped short of calling for a complete reversal of the takeover, an option that was open to it.

The report concentrated on the personal current account market and did not make a recommendation on Royal Bank of Scotland's 24 per cent share of the market for small and medium-sized businesses.

The ICB report called for measures to make it easier for customers to switch their current accounts . It did not address the question of "free" current accounts, which the Treasury Committee has argued are unfair and confusing for customers.

The interim report called for the ringfencing of retail banking operations within big, diversified banks to protect savers and taxpayers from investment banking losses. The proposal lacked detail and Sir John admitted that he did not yet know how it world work. But he said the report was "a window on our thinking" before a further round of discussions.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Content Writer - Global Financial Services

£25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Web Developer - PHP

£35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Field Sales Consultant - Financial Services - OTE £65,000

£15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Loan Underwriter

£18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...

Day In a Page

The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

The Silk Roads that trace civilisation

Long before the West rose to power, Asian pathways were connecting peoples and places
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

The honours that shame Britain

Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
When it comes to street harassment, we need to talk about race

'When it comes to street harassment, we need to talk about race'

Why are black men living the stereotypes and why are we letting them get away with it?
International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

International Tap Festival comes to the UK

Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border
Doris Lessing: Acclaimed novelist was kept under MI5 observation for 18 years, newly released papers show

'A subversive brothel keeper and Communist'

Acclaimed novelist Doris Lessing was kept under MI5 observation for 18 years, newly released papers show
Big Blue Live: BBC's Springwatch offshoot swaps back gardens for California's Monterey Bay

BBC heads to the Californian coast

The Big Blue Live crew is preparing for the first of three episodes on Sunday night, filming from boats, planes and an aquarium studio
Austin Bidwell: The Victorian fraudster who shook the Bank of England with the most daring forgery the world had known

Victorian fraudster who shook the Bank of England

Conman Austin Bidwell. was a heartless cad who carried out the most daring forgery the world had known
Car hacking scandal: Security designed to stop thieves hot-wiring almost every modern motor has been cracked

Car hacking scandal

Security designed to stop thieves hot-wiring almost every modern motor has been cracked
10 best placemats

Take your seat: 10 best placemats

Protect your table and dine in style with a bold new accessory
Ashes 2015: Alastair Cook not the only one to be caught in The Oval mindwarp

Cook not the only one to be caught in The Oval mindwarp

Aussie skipper Michael Clarke was lured into believing that what we witnessed at Edgbaston and Trent Bridge would continue in London, says Kevin Garside
Can Rafael Benitez get the best out of Gareth Bale at Real Madrid?

Can Benitez get the best out of Bale?

Back at the club he watched as a boy, the pressure is on Benitez to find a winning blend from Real's multiple talents. As La Liga begins, Pete Jenson asks if it will be enough to stop Barcelona
Athletics World Championships 2015: Beijing witnesses new stage in the Jessica Ennis-Hill and Katarina Johnson-Thompson heptathlon rivalry

Beijing witnesses new stage in the Jess and Kat rivalry

The last time the two British heptathletes competed, Ennis-Hill was on the way to Olympic gold and Johnson-Thompson was just a promising teenager. But a lot has happened in the following three years
Jeremy Corbyn: Joining a shrewd operator desperate for power as he visits the North East

Jeremy Corbyn interview: A shrewd operator desperate for power

His radical anti-austerity agenda has caught the imagination of the left and politically disaffected and set a staid Labour leadership election alight
Isis executes Palmyra antiquities chief: Defender of ancient city's past was killed for protecting its future

Isis executes Palmyra antiquities chief

Robert Fisk on the defender of the ancient city's past who was killed for protecting its future