NBNK Investments has submitted a revised proposal to Lloyds Banking Group to buy 632 of its branches.
Lloyds group has until November 2013 to complete the sale to meet European Commission rules.
The Co-operative Group is in talks with Lloyds group about acquiring its branches but questions have been raised about the suitability of its board and whether the sale will happen.
It is believed Lloyds group rejected a cash offer of about £1.5bn from NBNK last year. NBNK is now offering Lloyds group shareholders a stake in the new bank – or the equivalent in cash – via an alternative demerger structure.
Peter Levene, chairman of NBNK and former Lloyd’s group chairman, says: “NBNK offers none of the downsides to Lloyds group of a standalone initial public offering.
“We have the right board, management, strategy and experience to run and grow a large scale banking operation and achieve our plans for Project Verde. Our shareholders are supportive of our objectives.”
But a Lloyds group spokeswoman says: “The group acknowledges receipt of a letter outlining a revised proposal from NBNK. But we continue to negotiate solely with The Co-operative Group and are continuing to prepare for a divestment through an initial public offering.”