City talks up possible delay in EU-enforced Lloyds branch sale

LLOYDS Banking Group could press the European Commission to extend the deadline for selling 632 branches and other assets because regulatory hurdles are hindering their sale, City sources claimed yesterday.

An extension of the EC’s current November 2013 deadline would give the bank more time to prepare an alternative flotation of the so-called Project Verde assets if it is unsuccessful in pulling off a direct sale to either the Co-operative Group or NBNK Investments.

Lloyds ended exclusive talks with preferred bidder the Co-op last month, but fears persist that the Financial Services Authority has doubts about the potential acquisition of the assets by both the bidders in the frame.

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It is understood the regulator is concerned that the Co-op’s board has enough banking expertise for an acquisition that would effectively double its size in the sector.

It is also worried about the financing and IT issues that might confront the fledgling NBNK banking consolidation vehicle, led by City grandee Lord Levene.

One source said yesterday: “Lloyds can go for an EC extension as it’s not their fault they’ve had difficulties finding a buyer.

“They have as good a case as anyone to ask for an extension. There are a lot of issues around the sale and an IPO [initial public offering] is not a foregone conclusion for 2013.”

Lloyds, which declined to comment yesterday, was ordered to sell the branches and other assets by Brussels in return for receiving a £17 billion taxpayer bail-out in 2008 after its takeover of HBOS at the height of the financial sector meltdown.

The assets for sale include the 185 Lloyds TSB outlets in Scotland, 250 Lloyds branches in England and Wales, and 164 Cheltenham & Gloucester sites, as well as the Intelligent Finance online banking operation.

MATT SCUFFHAM