NBNK, the vehicle the City grandee Lord Levene wants to use to create a new bank, yesterday made a last-ditch bid to crash the Co-op's attempt to take control of 634 branches that Lloyds Banking Group was forced to put up for sale.
NBNK lost out at the first stage of the auction for the so-called Project Verde branches after Lloyds chose the Co-op Bank as its preferred bidder. At the time it said dealing with an existing player meant less "execution risk" to pulling off a deal.
Recently, however, doubts have been cast over whether the Co-op's bid will be approved by regulators and whether it can come up with the cash needed for a £1bn plus offer.
NBNK said yesterday it had worked out an alternative demerger plan: it would fully underwrite a transaction that would allow Lloyds shareholders – including the Government, which holds a 41 per cent stake – to choose between taking a cash windfall or opting for NBNK shares.
Sources close to NBNK said this would raise the value of the deal from its original offer of up to £1.5bn closer to the £2bn book value of the assets being sold.
But Lloyds has so far remained unmoved. The bank said yesterday it "acknowledged receipt" of NBNK's proposals but was pressing ahead with its discussions with Co-op. The latter declined to comment.
In case the Co-op deal fails Lloyds has been preparing a plan to float Project Verde separately on the stock market to comply with European regulators' November 2013 deadline for disposing of the branches.
Sources close to Lloyds acknowledged that the NBNK proposals presented "an additional option" should the Co-op talks collapse and that it enhanced the "credibility" of Verde. But there are no plans to start discussions just yet.
Lloyds shares closed up 1.33p at 31.92p yesterday, leaving them standing at half the taxpayers' average purchase price of 63.1p.
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