NBNK chief calls for cap on sale of Lloyds branches to speed up transfer

A SECOND prospective entrant into the UK's high street banking sector has called for the auction of 600-plus Lloyds branches to be capped to speed up their transfer to a new competitor.

Gary Hoffman, chief executive of UK banking consolidation vehicle NBNK Investments, yesterday echoed recent comments by Sir Richard Branson's Virgin Money that expanding the number of branches to be sold by Lloyds could be counter- productive.

It follows a call for a "substantially enhanced" divestiture of the Lloyds branches by the Independent Commission on Banking (ICB) in its preliminary findings nearly two months ago.

But Hoffman, a former chief executive of nationalised Northern Rock, said the existing sell-off of 600 branches, ordered by the European Commission in return for the taxpayer aid Lloyds has received, would be enough to create a "formidable competitor" to Britain's big five banks.

Hoffman said NBNK - set up by a group of City grandees spearheaded by Lord Levene - the outgoing chairman of the Lloyds of London insurance market, was open to acquiring more than the branches on the auction block. However, he said in a television interview: "If there are more available then that is fine, but time is more important to us than size.

"The crucial thing is that we get on and do that quickly, and I think the number of branches mandated by the EC enables us to create a competitor force and grow from there. I would not be encouraging delay in order to increase the number of branches."

NBNK's board also includes Sir David Walker, who is currently providing independent scrutiny of the long-awaited report by the Financial Services Authority into the collapse of Royal Bank of Scotland.

NBNK and Edinburgh-based Virgin Money are widely seen as the two front-runners for the branch network being sold off by Lloyds, which is more than 40 per cent owned by the taxpayer after its bailout following the takeover of HBOS in early 2009.

The package currently being sold, with the ICB's final recommendations to the government due in September, includes the 185 LLoyds TSB branches in Scotland, where the parent company owns Bank of Scotland and Scottish Widows.

Nearly 400 branches of Lloyds TSB and Cheltenham & Gloucester are also to be sold in England and Wales.

Hoffman also poured cold water yesterday on those calling for a new inquiry into the UK banking sector. "There have been lots of investigations of banking and competition over the years and not many have had any effect," he added."Clearly there is a need for more competition, and NBNK has been set up to provide that."

Lloyds - whose chief executive Antonio Horta-Osorio will unveil his strategy for the group on 30 June - is expected to issue an information memorandum on the branch sale by the end of next week.