Lloyds and Co-op propose hybrid deal over branch sale

Lloyds Banking Group and The Co-operative Bank have presented a hybrid proposal to the FSA which would allow the Co-op to acquire the 632 branches being sold off by Lloyds.

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.

The Sunday Telegraph has reported that under the latest proposal the Co-op would acquire the branches but the branch network would be managed by Verde’s interim management team, led by Paul Pester.

The Verde branches would continue to run off Lloyds’ technology platforms, a part of the proposal aimed at tackling FSA concerns about Co-op’s governance and systems expertise.

Last month Lloyds ended its exclusive talks with Co-op to sell the 632 branches, to open the way for NBNK Investments to make a revised bid.

However Lloyds said at the time Co-op was still its preferred bidder for the branches.