Lloyds Banking Group is considering the closure of several hundred Halifax agency counters, but furiously denies claims that it has plans to shut high-street branches.
The company insists that all options are still open as it grapples with European regulators and the details of its participation in the Government's Asset Protection Scheme (APS).
Halifax – which was subsumed by Lloyds Banking Group as part of the ill-fated HBOS takeover brokered by the Government last September – includes 300 counters in estate agencies, solicitors' practices and financial advisors' offices which offer limited services such as paying in and withdrawal of money, and are operated under licence by a third party.
Some 26 counter outlets are already scheduled for closure in September and October, but as the company seeks to reduce its reliance on the taxpayer the network as a whole is under assessment. But Lloyds hotly denies claims from a "deep throat" sources that the group has a plan – codenamed Project Tulip – which could see 500 of Halifax's high street branches closed down.
"A strategic review of the remaining third-party agency counters is underway – no decisions have therefore been taken," a spokesman for Lloyds said yesterday. "Contrary to recent reports, the 3,000 Lloyds Banking Group bank branches are not included in this review. Bank branches are a core and very important part of the group's retail banking model and will continue to be so. Agency counters are not Halifax branches."
The decision about Halifax counters comes against a backdrop of two tricky issues for Lloyds. On one hand, the European Commission is threatening to make the group sell some assets in order for the Lloyds/HBOS merger to pass state-aid and competition rules. The bank is already in the process of selling HBOS's integrated finance arm, which holds stakes in high-profile businesses including the Vue Entertainment cinema chain and David Lloyd Leisure, the gym group.
And there are reports the company may now be sweetening the deal with the inclusion of the assets' debt as well as their equity in an attempt to speed up the sale and head off a European Commission ruling.
Lloyds is also rumoured to be offering to sell two of its regional networks – Scotland's 185 Lloyds TSB branches and 164 Cheltenham & Gloucesters – as a concession to Europe. But the company will make no official comment on the issue. "We are working closely with the Treasury to demonstrate to the Commission that Lloyds has a strong plan to exit state aid," the spokesman said. "At this stage it is too early to say what the result of this review will be."
Lloyds is also embroiled in manoeuvring over its entry into the UK Government's APS – the insurance scheme to help put a floor under banks' bad debts. Under terms set out in principle in March, Lloyds is to put £260bn into the scheme, for which it will pay a £15.6bn premium to the Government and absorb the first £25bn-worth of losses. The Government already owns 43 per cent of the group, but the share issuance needed to raise the premium will push the public stake to 77 per cent.
After last month's half-year numbers recorded a loss of "only" £4bn – compared with the £5bn widely predicted – the group is understood to be looking for ways to reduce its participation in the scheme. The speculation in the City is that it will pursue a rights issue to raise extra capital, but there are also rumours that the company is looking at issuing a convertible bond.