NBNK plays down fresh bid talk

Sources close to banking investment vehicle NBNK yesterday played down reports it was preparing a sweetened bid for the 632 branches being sold by Lloyds, while preferred bidder the Co-operative scrambled to raise cash for the purchase.

Lloyds said last week that it was creating 500 jobs to prepare the branches and associated mortgage and banking business for sale.

The bank is being forced to sell a slice of its business as a condition of its state bailout during the financial crisis.

In December, Lloyds started exclusive talks to sell the branches to the Co-op for £1.4 billion. But NBNK, the buy-out vehicle headed by Lord Levene that aims to create a “new force” in British retail banking, is still thought to be interested in the branches.

A source said yesterday that, while it would likely step in if the Co-op deal fell through, it was not set to bid while talks between Lloyds and Co-op continued.

Several analysts have recently warned that the Co-op may have a hard task in taking on and integrating the Lloyds’ branches, especially as the regulator is taking a tough line with the mutual firm. The Co-op is said to be considering selling some of its non-core businesses to strengthen its balance sheet, allowing it to concentrate on groceries and financial services.