Lloyds Banking Group will decide whether to sell 632 branches to the Co-op Bank or to float the assets on the stock market by the end of June, the group revealed yesterday.
The Co-op’s agreed takeover of the branches last summer is hanging by a thread following concerns expressed by the Financial Services Authority over the capital strength of the mutual.
Lloyds boss Antonio Horta-Osorio, disclosing reduced annual losses at Lloyds of £570 million in 2012, said the bank remained “absolutely committed” to the Co-op sale, but a “Plan B” of a stock market float remained on the table.
“By the end of Q2 we will have to make a decision,” Horta-Osorio said. “By then we will be clear whether Plan A will go ahead or whether we revert to an IPO”.
Royal Bank of Scotland said this week that it would float more than 300 branches on the stock market over the next two years after a deal to sell the business to Santander collapsed last October.
Lloyds’s loss compares with a £3.5bn loss in 2011, which was largely caused by massive provisions for mis-selling payment protection insurance.
The group said yesterday it had taken another £1.5bn provision for PPI mis-selling, taking its total provision to £6.8bn.
However, the underlying performance at Lloyds continued to improve, with underlying profits up by more than 300 per cent at £2.6bn from £638m profit in the previous year. Bad debts at the bank tumbled 42 per cent to £5.7bn from £9.7bn, including down a third at £1.2bn at the bank’s high street business.
Horta-Osorio said Lloyds’s net lending to small businesses grew 4 per cent last year in a sector down 4 per cent, and that the bank funded one in four Britons buying their first home.
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