According to the FT, the “broad commercial terms” of the deal could be announced as early as today.
Co-op has been the preferred bidder for the Project Verde business for some time, however it lost its exclusivity agreement with Lloyds last month. NBNK has also been in talks with Lloyds, which has not ruled out a stock market flotation or a spin-off of the business to shareholders.
The FSA has reportedly had concerns with 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.
However, the report says that most of the regulatory queries have now been solved. The Co-op has offered to reverse its bank into the Project Verde business to appease the regulator. It adds the Verde platform would allow the building society to inject capital from its retail arm to ensure the new bank met capital adequacy ratios.
Lloyds’ branch disposal, named by the bank as ‘Project Verde’, is a requirement by the European Commission as part of Lloyds receiving state aid in 2008.