EU approves Lloyds plan to offload branches

Published on Wednesday 18 November 2009 20:26

PLANS by Lloyds Banking Group to sell off parts of its business were formally given the green light by the European Commission yesterday.

Earlier this month, Lloyds announced proposals to dispose of at least 600 branches – about a fifth of its UK network – to soothe European competition concerns over the public support it has received.

The bank is also raising 21 billion to strengthen its balance sheet and prevent the taxpayer's stake rising beyond the current 43 per cent.

European Union competition commissioner Neelie Kroes said: "This plan effectively addresses the commission's competition concerns and at the same time ensures the return of Lloyds to long-term viability."

Under the restructuring, the businesses up for sale represent a 4.6 per cent share of the UK personal current accounts market and about 19 per cent of the bank's mortgage assets.

Parts of Lloyds to be sold within four years include the TSB and Cheltenham & Gloucester brands, Lloyds TSB's branches in Scotland and some additional Lloyds TSB branches in England and Wales, as well as the Intelligent Finance online banking business.

&#149 Lloyds Banking Group yesterday published a preliminary price of 89.7246p that would be used in a conversion to equity of new hybrid bonds the UK bank plans to issue via an exchange offer to investors. The new bonds – enhanced capital notes – are designed to convert to equity if the bank's core Tier 1 capital ratio falls to less than 5 per cent.