NBNK bullish about Lloyds branch deal

NBNK – under chairman Lord Levene and chief executive Gary Hoffman, who turned around Northern Rock – also said the financial regulator was happy with their discussions.

The Financial Services Authority has been seen as an impediment to both the Co-op and NBNK, scrutinising the capital strength and liquidity of the bidders and airing management concerns about the Co-op parent board’s banking expertise.

NBNK said in its annual report: “NBNK has been in discussions with Lloyds following its renewed offer for the ‘Verde’ asset package. These discussions and meetings have progressed positively. The FSA has confirmed to NBNK that the process of engagement is satisfactory from its point of view at this stage.”

Lloyds, 40 per cent taxpayer-owned, ended exclusive talks with the Co-op on 27 April, but indicated it would not fully engage with NBNK unless it was confident the suitor could get regulatory approval.

NBNK has said it would underwrite any demerger of the branches to give Lloyds the choice of a new share in a divested branch business or accepting cash.

The group, which is quoted on the stock market, is backed by institutions including Bailie Gifford, BlackRock Investment Management, F&C Asset Management and JP Morgan Asset Management.