Lloyds denies Co-op deal pressure

 

Lloyds Banking Group bosses denied political pressure to accept the Co-operative Bank's ill-fated £700 million bid for its branches today, insisting they acted in the best interests of shareholders.

In a hearing with MPs over the collapse of the branch deal, Lloyds chairman Sir Win Bischoff said there was "no political interference or contact" surrounding the decision to choose the Co-operative over the two other final bidders.

The Co-op pulled out of the branch takeover in April over fears about the strength of its banking arm's balance sheet, shortly before ratings agency Moody's downgraded it to junk status and warned it may need taxpayer support.

Moody's delivered another blow to the Co-op Bank today, slashing its rating on the group again following yesterday's details of its aims to plug a £1.5 billion hole in its finances, citing doubts over the group's plans.

Sir Win and Lloyds chief executive Antonio Horta-Osorio revealed they discovered a capital shortfall at the Co-op in December 2012 and were "sceptical" it could be plugged in time for the branch sale to complete as scheduled in March.

But they said they decided to give the Co-op more time, given its assurances the deal could still be done.

MPs on the Treasury Select Committee grilled the Lloyds chiefs amid concerns of political interference over the decision to choose the Co-op over rival bidders, investment group NBNK and Sun Capital.

Lord Levene, who chaired the NBNK bid, claimed in a written statement there had been "significant political involvement leading up to the original decision" in favour of a bid from a mutual.

He added he was advised the decision was "based on an indication from senior politicians within the Coalition that the Co-op deal was to be the preferred and definitive solution".

Mr Horta-Osorio said the Government had only indicated its preference for the mutual model after it had announced its decision to sell the 632 branches to the Co-op.

Sir Win told MPs the only factors considered by the board in the bidding process were the financial aspects of the deal and the ability to execute.

The Lloyds bosses revealed the Co-op's offer was higher than NBNK's £630 million bid.

Lloyds, which has to divest the branches as an EU condition of state aid, will instead float the branches on the stock market under the TSB Bank brand following the Co-op bid's collapse.

The deal would have transformed Co-op Bank into a major customer-owned rival to the big four high street banks, creating a lender with almost 1,000 branches and 11 million customers.

PA

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?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Mortgage Advisor - OTE £95,000

£40000 - £95000 per annum: Recruitment Genius: This is an exciting opportunity...

SThree: Trainee Recruitment Consultant

competitive: SThree: Are you passionate about sales?Do you have a keen interes...

Recruitment Genius: Loan Adviser - OTE £30,000

£17000 - £30000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Day In a Page

Isis in Syria: Influential tribal leaders hold secret talks with Western powers and Gulf states over possibility of mobilising against militants

Tribal gathering

Influential clans in Syria have held secret talks with Western powers and Gulf states over the possibility of mobilising against Isis. But they are determined not to be pitted against each other
Gaza, a year on from Operation Protective Edge: A growing population and a compromised and depleted aquifer leaves water in scarce supply for Palestinians

Gaza, a year on from Operation Protective Edge

A growing population and a compromised and depleted aquifer leaves water in scarce supply for Palestinians
Dozens of politicians, bureaucrats and businessmen linked to Indian bribery scandal die mysteriously

Illnesses, car crashes and suicides

Dozens of politicians, bureaucrats and businessmen linked to Indian bribery scandal die mysteriously
10 best trays

Get carried away with 10 best trays

Serve with ceremony on a tray chic carrier
Wimbledon 2015: Team Murray firing on all cylinders for SW19 title assault

Team Murray firing on all cylinders for title assault

Coaches Amélie Mauresmo and Jonas Bjorkman aiming to make Scot Wimbledon champion again
Wimbledon 2015: Nick Bollettieri - Vasek Pospisil must ignore tiredness and tell himself: I'm in the quarter-final, baby!

Nick Bollettieri's Wimbledon Files

Vasek Pospisil must ignore tiredness and tell himself: I'm in the quarter-final, baby!
Ashes 2015: Angus Fraser's top 10 moments from previous series'

Angus Fraser's top 10 Ashes moments

He played in five series against Australia and covered more as a newspaper correspondent. From Waugh to Warne and Hick to Headley, here are his highlights
Greece debt crisis: EU 'family' needs to forgive rather than punish an impoverished state

EU 'family' needs to forgive rather than punish an impoverished state

An outbreak of malaria in Greece four years ago helps us understand the crisis, says Robert Fisk
Gaza, a year on from Operation Protective Edge: The traumatised kibbutz on Israel's front line, still recovering from last summer's war with Hamas

Gaza, a year on from Operation Protective Edge

The traumatised kibbutz on Israel's front line, still recovering from last summer's war with Hamas
How to survive electrical storms: What are the chances of being hit by lightning?

Heavy weather

What are the chances of being hit by lightning?
World Bodypainting Festival 2015: Bizarre and brilliant photos celebrate 'the body as art'

World Bodypainting Festival 2015

Bizarre and brilliant photos celebrate 'the body as art'
alt-j: A private jet, a Mercury Prize and Latitude headliners

Don't call us nerds

Craig Mclean meets alt-j - the math-folk act who are flying high
How to find gold: The Californian badlands, digging out crevasses and sifting sludge

How to find gold

Steve Boggan finds himself in the Californian badlands, digging out crevasses and sifting sludge
Singing accents: From Herman's Hermits and David Bowie to Alesha Dixon

Not born in the USA

Lay off Alesha Dixon: songs sound better in US accents, even our national anthem
10 best balsamic vinegars

10 best balsamic vinegars

Drizzle it over salad, enjoy it with ciabatta, marinate vegetables, or use it to add depth to a sauce - this versatile staple is a cook's best friend