Lloyds mulls spin-off for branches up for sale

Lloyds Banking Group may spin off more than 600 branches and list them as a new bank if an auction of the business fails to attract decent bids, it emerged yesterday.

Last month, the bank appointed Paul Pester to oversee the branches earmarked for disposal, and said he would head the business if it was listed separately.

A spokeswoman for Lloyds said yesterday: "It has always been the objective to have a dual track. We will look for a buyer, and if we need to, the IPO (initial public offering] option is there."

Lloyds has been told by European regulators to sell some 600 branches, which would represent the UK's seventh-biggest bank and could be worth more than 3 billion, analysts have said.

Selling the branches is the preferred option, and Virgin Money, part of entrepreneur Sir Richard Branson's group, recently said it planned to bid. New UK bank venture NBNK is seen as another front-runner.

Other bidders could include Clydesdale-owner National Australia Bank and Tesco. Formal sales documents were due to be sent out today.

Meanwhile, Lloyds and Royal Bank of Scotland - the two biggest banks bailed out during the financial crisis - are to cut about 500 jobs between them in a fresh round of redundancies.

RBS will axe about a fifth of its 1,000-strong global banking team, which houses the group's corporate finance and advisory divisions within its investment arm, according to news agency Reuters.

Lloyds is axing 300 jobs across its retail, wholesale and wealth units. It has shed 27,000 jobs over the past two years, as it continues an integration programme following its 2008 takeover of troubled lender HBOS.

The bank is closing an office in Bridgend, Wales, where it employs 700 people. Most of those staff will get positions in other offices, with 50 jobs there expected to go.