A proposal aimed at kick-starting the Co-op’s stalled acquisition of 632 Lloyds branches in the UK has been put to the markets regulator, it was reported today.
The Co-op’s game-changing deal for Lloyds’ “Project Verde” branches is under threat because the Financial Services Authority (FSA) is thought to have concerns over the mutual’s management capabilities and governance.
However, the Sunday Telegraph said a plan now under consideration involved Verde’s interim management team transferring with the business to run the Co-op’s enlarged banking business.
And the Verde branches would not be removed from Lloyds’ technology platforms and would instead be reliant on the high street bank for its operation.
Lloyds has until November 2013 to offload the Verde estate as a result of a penalty imposed by the European Union for accepting a taxpayer bailout.
The assets, which come with the brands TSB and Intelligent Finance, account for a 4.6% share of the UK current account market and up to 19% of Lloyds’ mortgage book, with around five million customers.
A period of exclusivity between Lloyds and Co-op on the Verde sale ended two weeks ago and has potentially opened the door to NBNK, the new banking venture led by Lord Levene and former Northern Rock boss Gary Hoffman.
It has made a rival offer under which it plans to “create a new, large challenger bank and brand that will shake up UK high street banking”.
The new arrangements with the Co-op still meet the terms of the EU’s ruling, given the branches would be under the control of a third-party. However it is unclear how it will affect the price Lloyds might expect from the Co-op.