Sale of Lloyds branches to Co-op 'faltering'

Fri, 23 Mar 2012 | DIVISION SALE

The planned sale of 630 Lloyds bank branches to the Co-operative Group is facing significant difficulties, after the companies found negotiations to be more difficult than expected.

A statement from Lloyds has confirmed that they are still in talks with the Co-op on the deal – the terms of which had been expected to be completed by the end of the month – but said that it was “continuing to prepare a divestment through an initial public offering”.

The move has left City analysts believing that the initial public offering (IPO) may be the most likely option, after it emerged that the financial regulator is yet to be convinced that the Co-op has the adequate governance and systems in place to take on such a large banking business.

It is understood that Lloyds has been working with the Financial Services Authority and UK Financial Investments – the operator of the state’s 41 per cent stake in the bank – about all options, including the IPO.

Lloyds has until November 2013 to divest the branches, under the European Commission-set deadlines that came as a condition of its taxpayer-funded rescue.

The statement issued by Lloyds also stated that they would not be able to give an update on the situation until the second quarter of 2012. The statement explained, “Given that this is a substantial business and a highly complex transaction the group now anticipates providing a further update in Q2 2012.”

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