The £1bn sale of Lloyds' 632 branches, demanded by European competition regulators to compensate for its state aid, was looking ever more shambolic yesterday as the part-nationalised banking giant ended its exclusive talks with the Co-op.
Doubts have been growing for weeks about whether the Co-op had the financial clout and expertise to take on such a major chunk of Britain's high street banking market. The Financial Services Authority has held protracted talks with the Co-op about its suitability.
Lloyds said it would now re-enter talks with NBNK, Co-op's rival suitor led by former Northern Rock boss Gary Hoffman and the City grandee Lord Levene. NBNK came back with a revised offer for Lloyds earlier this month and is keen to take on the business, whose branches have about 5 per cent of the UK banking market.
However, Lloyds still has to satisfy itself that NBNK can convince the regulator that it can pull the deal off and run the bank safely.
In particular, it will seek reassurance over whether Mr Hoffman and Lord Levene have convinced the Financial Services Authority about its capital and liquidity plans and its technical prowess to manage such a big business. Lloyds also wants to ensure that NBNK can definitely achieve the underwriting and capital raising plans it has promised.
NBNK said it was confident it could meet the regulatory requirements and said it was still in talks with the FSA.
Lloyds, 40 per cent-owned by the taxpayer, said that, despite the ending of the exclusivity agreement, a sale to the Co-op remained its preferred option.
If neither buyer comes up to scratch, Lloyds chief executive, Antonio Horta-Osorio, has only one option left – a stock market flotation by the end of the 2013 deadline.
Virgin had expressed an interest in buying it earlier on in the process but walked away.Reuse content