Lloyds Banking Group and The Co-operative Bank have presented a hybrid proposal to the Financial Services Authority which would allow The Co-op to acquire 632 Lloyds group branches.
Lloyds group’s branch disposal – Project Verde – is a European Commission requirement after the lender received state aid in 2008.
The Sunday Telegraph reported that under the latest proposal The Co-op would acquire the branches but they would be managed by Project Verde’s interim management team, led by former Lloyds group director Paul Pester.
The branches would continue to run off Lloyds group’s technology platforms, in an attempt to tackle FSA concerns about The Co-op’s governance and systems expertise.
Last month Lloyds group ended its exclusive talks with The Co-op to sell the 632 branches to open the way for NBNK Investments to make a revised bid.
But Lloyds group said at the time that The Co-op was still its preferred bidder.