Lloyds ends exclusive talks with Co-op to buy 632 branches
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UPDATED:
21:23 GMT, 27 April 2012
Lloyds has broken off exclusive talks with the Co-op to buy 632 branches, in an embarrassing setback for the state-supported bank and a blow for Britain’s biggest mutual.
Setback: Lloyds has broken off exclusive talks with the Co-op to buy 632 branches
Although the Co-op remains the preferred bidder, Lloyds is seeking more details from NBNK, the buyout vehicle set up by City grandee Lord Levene to create a retail bank from the wreckage of the financial crisis.
If Lloyds is persuaded, and City watchdog the Financial Services Authority raises no objections, Levene and his cohorts will be invited back to the negotiation table.
Key issues are understood to include NBNK’s capital liquidity and ability to raise money from investors to finance the deal.
The news is a major coup for the
upstart, which launched a revised bid of more than 1.5billion to buy
the branches earlier this month, amid continued reports that the deal
with Co-op was on the rocks.
The announcement also confirms
revelations by the Mail in February that the watchdog had serious
concerns about the Co-op’s plans to buy the branches Lloyds was forced
to offload as a condition of taking state aid.
There are also fears the FSA will
want to bring the entire Co-op group – from its supermarket to it’s
funeral business – under its regulatory framework. This would require the mutual to hold huge levels of capital as a buffer to prevent a collapse.
Lloyds slipped out the news as all eyes in the City were on Barclays’ eagerly anticipated showdown with shareholders.
But sources said the announcement was timed to coincide with a letter sent to NBNK seeking details of its bid yesterday.
Question marks remain over the investment vehicle, spearheaded by former
Northern Rock boss Gary Hoffman, including, its ability to raise
sufficient money to finance the deal.
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