Martin Flanagan: Canny players of long game show their hand

Some will call its injury‑time attempt to win the match against the rival interest from the Co-op’s banking arm opportunistic chutzpah; others will say its latest unsolicited offer approach is refusing to give in gracefully.

Whatever, it certainly livens things up at the 11th hour of the cliffhanger. NBNK, led by the two City grandees Lord Levene and Sir David Walker and former Northern Rock supremo Gary Hoffman, looked to have fallen by the wayside in December when, in a shortlist of two, Lloyds chose the Co-op as its preferred bidder.

Lloyds hedged its bets by saying a stock market flotation of the so-called Project Verde assets remained on the table if a sale to the Co-op could not be concluded.

However, NBNK has remained in the wings, and has clearly been emboldened as regulatory doubts have persisted that the Co-op can pull off a deal that would double its size.

The Financial Services Authority is known to be concerned about the perceived lack of banking expertise on the Co-op’s main mutual board, particularly as the group is seen as having taken an unconscionable time to integrate the much smaller acquisition of the Britannia building society.

One deadline of late March for a resolution of the Lloyds/Co-op talks has been missed, and Co-op chief executive Peter Marks admitted at the mutual’s annual results less than a fortnight ago that he could not guarantee a deal would crystallise.

So NBNK chairman Levene and chief executive Hoffman have struck. It is a delicate situation, though. Lloyds and NBNK cannot talk about the latest proposal because the bank is currently bound by its exclusivity agreement with the Co-op.

But the new offer is now the elephant in the room of British banking consolidation. The bid for the branches has been pitched to appeal to a government eager to start selling down its 41 per cent stake in Lloyds, while also giving institutional investors in particular a chance to share in the upside of a new quoted bank that would be solely focused on UK retail banking, including SME lending.

NBNK says Lloyds shareholders can receive cash directly in the bid and/or receive shares in a new banking butterfly that would emerge from the Project Verde caterpillar.

Another nice touch, clearly designed to appeal to the regulator, is that the new bank would be the first to explicitly have no short-term bonuses for senior managers.

NBNK is banking on two things. That, after four months of talks with Lloyds, the Co-op is a dead bank bid walking. And that NBNK’s alternative demerger proposal will tempt Lloyds because it takes the pricing uncertainty out of the alternative on the table of a straight stock market flotation.

The backdoor banking intruder underwrites the demerger, and also takes away the costs of Lloyds independently listing the business.

Whether it carries the day is yet to be seen, but it will give Lloyds chief executive Antonio Horta-Osorio food for thought.

Parker resolves to put childish things away

MOTHERCARE has thrown its UK rattle out of the pram, but is keeping its dolly. Fed up with its baby products lunch being eaten by the supermarkets and internet rivals, executive chairman Alan Parker has stepped up the retrenchment programme on home turf.

Whereas a net 62 Mothercare stores were closed in the UK in the trading year just gone, Parker now plans to close a further 111 (including 75 Early Learning Centres) over the next three years. This could mean about 730 redundancies.

The company reckons this will leave a profitable core of 200 outlets here to throw money off for the new Mothercare lollipops of international expansion and a greater online presence.

It is a growth strategy pursued by an array of British retailers even before the latest UK consumer downturn, from Debenhams, Marks & Spencer and Tesco downwards.

It is worth a shot. Childrens’ retailers were once thought of as a hugely defensive play, always resilient, but competition has changed the dynamics of the sector.