Lloyds staff in City summit as Branson declares hand

LLOYDS Banking Group summoned several hundred branch managers to a top-level meeting in London's Docklands yesterday amid growing worries over the future ownership of the network.

The meeting came 24 hours after Sir Richard Branson, owner of Edinburgh-based Virgin Money, declared his interest in bidding for the 600-plus branches Lloyds has been ordered to sell by the European Commission. Lloyds shares rose 0.6p to 51.6p.

Yesterday's meeting at the cavernous Excel centre is understood to have been attended by the managers of the 185 Scottish Lloyds TSB branches on the selling block, as well as more than 400 from affected Lloyds TSB branches in England and Wales and the bank's Cheltenham & Gloucester operation.

Staff were addressed by Paul Pester, who is masterminding the sale of non-core assets following his recent appointment as chief executive of Project Verde, the name given to the initiative.

Pester is an integration expert, having created Virgin Money, and, as managing director of Santander UK, pulled together Bradford & Bingley with the Abbey and Alliance & Leicester businesses.

But one Scots manager said yesterday that morale was at rock bottom and there were fears over what would happen to the branches being offloaded and whether there were more sales and job losses to come. "We're not convinced the new owner will keep the branches open," he said.

But a source at Lloyds said: "Lloyds feels it is important that people whose branches have been selected to form the business to be sold are able to get together and talk with people who are in the same situation.

"It is an exciting time, but obviously people will have questions. For instance, how to answer queries from customers about what will happen to their current accounts after the sale.

"It is also important for managers to be able to deal with questions about the sale of the branches from the employees on the ground, and that will be another issue for discussion, talking about the various options."

The disposal of the branches, which includes 250 Lloyds TSB outlets in England and Wales and 164 C&G branches, as well as Lloyds's Intelligent Finance internet bank, will create the seventh biggest banking group in Britain.

The Independent Commission on Banking recommended in its initial findings six weeks ago that the Lloyds branch sale should be "substantially enhanced" to encourage greater competition on the high street.

But the ICB's proposal was vigorously opposed by Lloyds chief executive Antonio Horta-Osorio, who is known to want to identify a buyer for the branches by the end of this year to draw a line under what he sees as a distraction.Other potential buyers are believed to include NBNK Investments, a banking consolidation vehicle set up by Lloyds of London chairman Lord Levene and other City grandees.

Horta-Osorio, who took over at Lloyds from Eric Daniels earlier this year from Santander, is expected to announce on 30 June what other assets are for sale. There has been speculation that Edinburgh-based Scottish Widows, bought by Lloyds TSB for 7bn in 1999, may go.

One banking analyst said yesterday: "In exercises like this, it is likely it would be stressed to the senior managers that although the name above the door will change, the customers and the work remains much the same."

Brussels ordered the sale in return for the major market shares Lloyds acquired in areas like personal accounts and mortgages through its takeover of HBOS in early 2009, and a government bailout that leaves the taxpayer with 41 per cent of the group.