NBNK to close as Lloyds sells branches to Co-op

Lloyds Banking Group has agreed terms to sell 632 of its branches to the Co-operative Group resulting in rival bidder NBNK Investments announcing plans to close.

Lloyds group’s branch disposal, named Project Verde, was required by the European Commission under the terms whereby Lloyds received state aid in 2008.

In an announcement on the London Stock Exchange last Thursday, Lloyds group revealed it has ended talks with rival bidder NBNK, which will now be wound up.

In a statement NBNK says there were no other UK banking assets available which would meet its objective and it has begun to take steps to wind up the company.

Gary Hoffman, chief executive of NBNK, says: “We are disappointed the door has now been closed on this opportunity, with the result that we will be unable to deliver our vision of banking, bringing a vibrant challenger to the high street to provide the level of service that customers want and deserve.”

The Project Verde business has almost five million customers and involves 6% of all bank branches in the UK. Combined with the Co-op it will have 7% of the total market for current accounts in the country.

The deal is subject to agreeing satisfactory documentation, the approval of the respective boards of Lloyds group and the Co-op, and further discussions with the Financial Services Authority, the Treasury and the European Commission.

The Co-op has been the preferred bidder for the Project Verde business for some time, although it lost its exclusivity agreement with Lloyds group last month.

The FSA has reportedly had concerns about the Co-op deal, citing the complex structure of the group.

There have also been reports that the regulator may call for the Co-op to hold an additional £3bn of capital at group level.