Lloyds plans 500 new jobs despite fears over sell-off to the Co-op

LLOYDS Banking Group has announced it will create 500 jobs as it prepares for the sale of hundreds of retail bank branches to the Co-operative Group.

But the part-nationalised lender admitted the sale of the 630 branches was proving to be “highly complex”, signalling that a deal may take longer than planned and may even fall apart.

Britain’s regulator is taking a tough line and requiring the mutually-owned Co-op to strengthen its systems and board to prepare for the deal.

Several analysts have warned that the Co-op may have a hard task in taking on and integrating the Lloyds’ branches.

Oriel Securities analyst Mike Trippitt said: “I think the Lloyds’ statement is a warning shot to the Co-op. It doesn’t feel like a done deal.”

Lloyds said yesterday that it was making progress in its talks with the mutual group over the deal, code-named “Project Verde”. The bank added: “However, given that this is a substantial business and a highly complex transaction, the group now anticipates providing a further update in Q2 2012.”

Lloyds also said that the Verde deal would be sweetened with the inclusion of five administrative centres around the UK that would provide the branch network with back office services such as telephony, banking operations and mortgage centre support.

Some 1,400 staff in these locations will become part of the Verde business, joining around 5,000 branch staff.

A spokesman for the bank said “several hundred” employees based in Livingston – at the former head office of HBOS’ Intelligent Finance business – would transfer to the Verde unit. The other locations were Birmingham, Gloucester, Sunderland and Swansea.

The spokesman said a “large number” of the 500 additional jobs would go to Livingston.

In December, Lloyds started exclusive talks to sell the branches to the Co-op, which beat out NBNK, a City-backed rival for banking assets.

Lloyds reiterated that, while its preferred option remained a sale of the assets to the Co-op, it would keep the fall-back option of a stock market flotation.

A sale of a portfolio of loans to private equity group Bain Capital, also revealed yesterday, confirmed that Lloyds is accelerating the sale of “non-core” assets.

Bain Capital’s credit investment arm Sankaty Advisors has agreed to buy a portfolio with a face value of about £500m for what is understood to be a “knock-down price”.

Lloyds has been selling off non-core assets as part of a restructuring to strengthen its financial positions, chipping away at a £141 billion book of distressed non-core loans.