Lloyds set to press ahead with sell-off to Co-op

Verde deal agreed and talks begin after 11th-hour counter bid from NBNK fails

Lord Levene's attempt to create new force in retail banking was thwarted for a second time last night after Lloyds Banking Group said it planned to sell more than 632 branches to the Co-op in a deal worth up to £1.5bn just hours after a last ditch bid to scupper the tie up.

The City grandee and former Lloyd's of London chairman was the driving force behind the creation of NBNK which hoped to spirit away the branches – being sold as "Project Verde" – after being allowed back into the bidding when its rival appeared to be floundering amid regulatory concerns.

But last night Lloyds said Co-op was again its preferred bidder and would again be granted exclusive talks, appearing to slam the door on NBNK, which had appointed former Northern Rock boss Gary Hoffman to spearhead its bid and pledged to create a traditional "simple" bank.

Lloyds said in a statement: "The Group has made considerable progress with the Co-operative Group on the Verde transaction. The group and Co-op now have an understanding on the commercial terms for the transaction. This is subject to agreeing satisfactory documentation, the approval of their respective boards, and further discussions with the FSA, HMT and the European Commission."

The bank said the exclusivity had been granted to allow it to proceed with negotiations expected to lead to the signing of a much delayed 'Heads of Agreement' between the two institutions.

News of Co-op's apparent victory will come as a bitter blow to Aim listed NBNK, which will now be wound up thanks to the lack of targets.

At its annual meeting, NBNK said it had submitted a revised proposal in a final effort to draw the deal away from Co-op. But the attempt failed and the deal is set to proceed with the latter having satisfied regulators that it can cope with a transaction that will triple its bank's size and make banking by far its biggest business operation.

That will likely see Co-op's existing bank reversed into Verde with capital from its huge retail arm used to underpin the banking operation.

The Verde businesses have 5m customers and combined with Co-op will enjoy a 7 per cent share of the UK current account market, presenting a realistic alternative to existing UK banks. David Fleming, Unite national officer said the union would now seek "assurances that the jobs of staff at the Lloyds branches facing sale to the Co-operative Group will be protected".

He said the protracted talks between the two banks had left 9,000 employees feeling "vulnerable" and wants assurances that there will be no compulsory layoffs, branches closes, or changes to staff terms.

NBNK had previously attempted a takeover the UK businesses of National Australia Bank, which owns theYorkshire and Clydesdale banks, but it floundered after the two sides could not agree on price. NAB has since cut back in this country leaving the banks to their heartlands.

NBNK was unable to bid for Northern Rock's "good" bank as a result of hiring Mr Hoffman, who was appointed to clean up what was left of the bank after it was taken into state hands. As a result, Virgin Money landed the business for £747m, leaving the tax payer with a £400m loss. Like Lloyds, Royal Bank of Scotland was also ordered to sell branches as a result of its bailout by the Government, but they were bought by Banco Santander's UK arm.

Suggested Topics
News
A model of a Neanderthal man on display at the National Museum of Prehistory in Dordogne, France
science
News
Richard Dawkins dedicated his book 'The Greatest Show on Earth' to Josh Timonen
newsThat's Richard Dawkins on babies with Down Syndrome
Arts and Entertainment
Eye of the beholder? 'Concrete lasagne' Preston bus station
architectureWhich monstrosities should be nominated for the Dead Prize?
Extras
indybest
PROMOTED VIDEO
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Arts and Entertainment
music
Sport
football
Life and Style
This month marks the 20th anniversary of the first online sale
techDespite a host of other online auction sites and fierce competition from Amazon, eBay is still the most popular e-commerce site in the UK
News
i100
Arts and Entertainment
tv
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

Quantitative Analyst (Financial Services, Graduate, SQL, VBA)

£45000 per annum: Harrington Starr: Quantitative Analyst (Financial Services, ...

Application Support Engineer (C++, .NET, VB, Perl, Bash, SQL)

Negotiable: Harrington Starr: Application Support Engineer (C++, .NET, VB, Per...

AIFMD Business Analyst / Consultant - Investment Management

£450 - £600 per day: Harrington Starr: AIFMD Business Analyst / Consultant - I...

Business Analyst Solvency II SME (Pillar 1, 2 & 3) Insurance

£450 - £600 per day: Harrington Starr: Business Analyst Solvency II SME (Pilla...

Day In a Page

Middle East crisis: We know all too much about the cruelty of Isis – but all too little about who they are

We know all too much about the cruelty of Isis – but all too little about who they are

Now Obama has seen the next US reporter to be threatened with beheading, will he blink, asks Robert Fisk
Neanderthals lived alongside humans for centuries, latest study shows

Final resting place of our Neanderthal neighbours revealed

Bones dated to 40,000 years ago show species may have died out in Belgium species co-existed
Scottish independence: The new Scots who hold fate of the UK in their hands

The new Scots who hold fate of the UK in their hands

Scotland’s immigrants are as passionate about the future of their adopted nation as anyone else
Britain's ugliest buildings: Which monstrosities should be nominated for the Dead Prize?

Blight club: Britain's ugliest buildings

Following the architect Cameron Sinclair's introduction of the Dead Prize, an award for ugly buildings, John Rentoul reflects on some of the biggest blots on the UK landscape
eBay's enduring appeal: Online auction site is still the UK's most popular e-commerce retailer

eBay's enduring appeal

The online auction site is still the UK's most popular e-commerce site
Culture Minister Ed Vaizey: ‘lack of ethnic minority and black faces on TV is weird’

'Lack of ethnic minority and black faces on TV is weird'

Culture Minister Ed Vaizey calls for immediate action to address the problem
Artist Olafur Eliasson's latest large-scale works are inspired by the paintings of JMW Turner

Magic circles: Artist Olafur Eliasson

Eliasson's works will go alongside a new exhibition of JMW Turner at Tate Britain. He tells Jay Merrick why the paintings of his hero are ripe for reinvention
Josephine Dickinson: 'A cochlear implant helped me to discover a new world of sound'

Josephine Dickinson: 'How I discovered a new world of sound'

After going deaf as a child, musician and poet Josephine Dickinson made do with a hearing aid for five decades. Then she had a cochlear implant - and everything changed
Greggs Google fail: Was the bakery's response to its logo mishap a stroke of marketing genius?

Greggs gives lesson in crisis management

After a mishap with their logo, high street staple Greggs went viral this week. But, as Simon Usborne discovers, their social media response was anything but half baked
Matthew McConaughey has been singing the praises of bumbags (shame he doesn't know how to wear one)

Matthew McConaughey sings the praises of bumbags

Shame he doesn't know how to wear one. Harriet Walker explains the dos and don'ts of fanny packs
7 best quadcopters and drones

Flying fun: 7 best quadcopters and drones

From state of the art devices with stabilised cameras to mini gadgets that can soar around the home, we take some flying objects for a spin
Joey Barton: ‘I’ve been guilty of getting a bit irate’

Joey Barton: ‘I’ve been guilty of getting a bit irate’

The midfielder returned to the Premier League after two years last weekend. The controversial character had much to discuss after his first game back
Andy Murray: I quit while I’m ahead too often

Andy Murray: I quit while I’m ahead too often

British No 1 knows his consistency as well as his fitness needs working on as he prepares for the US Open after a ‘very, very up and down’ year
Ferguson: In the heartlands of America, a descent into madness

A descent into madness in America's heartlands

David Usborne arrived in Ferguson, Missouri to be greeted by a scene more redolent of Gaza and Afghanistan
BBC’s filming of raid at Sir Cliff’s home ‘may be result of corruption’

BBC faces corruption allegation over its Sir Cliff police raid coverage

Reporter’s relationship with police under scrutiny as DG is summoned by MPs to explain extensive live broadcast of swoop on singer’s home