Doubts were raised last week when Co-op chief executive Peter Marks is reported to have told the BBC the deal “may not go ahead”.
However, the Mail on Sunday reports a Lloyds Banking Group source as saying: “Exclusivity with Co-op will continue. It is the preferred bidder.”
The Co-op deal has been hit by delays due to FSA concerns about the ability of Co-op to manage the business. The regulator is understood to be pushing the firm to revamp its board and appoint managers capable of running large and complex financial services businesses.
NBNK is also rumoured to be making a second bid for the branches following the concerns. NBNK originally lost out to Co-op in the bidding process for the branches.