START-up bank NBNK and mutually owned Co-operative Group have been shortlisted as prospective buyers of a 632 branch portfolio being sold by Lloyds Banking Group, although a stock market listing also remains a strong possibility.
It is understood that Sun Capital, the vehicle of entrepreneur Hugh Osmond, which was also in the running, lost out because its bid was regarded as less competitive than that of the others when the second-round offers were submitted earlier this month.
The so-called Project Verde portfolio includes 185 Lloyds TSB Scotland branches, the Edinburgh-based Intelligent Finance online bank and the TSB brand and would offer a 4.6% share of the UK current account market.
Lloyds’s board, which has appointed former Santander executive Antonio Lorenzo to oversee the sale, is still expected to decide on a preferred bidder or a flotation at its December meeting, despite the turmoil at the bank.
Tim Tookey, appointed interim group chief executive after Antonio Horta-Osorio was forced to take time off due to fatigue, said: “We are very pleased with the level of interest and detail of the offers that have been made.
“We will now move quickly in parallel talks with each bidder.”
Lloyds, which owns Bank of Scotland, continues to work on an alternative plan to float the business within the next few years which would give it the potential to earn a higher price if market conditions pick up.
Bank share prices have plunged in the past year, thereby reducing the price Lloyds can hope to command for the business which it is being forced to sell by European competition regulators to compensate for it having been bailed out by the British Government during the credit crisis.
In the meantime it is negotiating with bidders over the details of their offers. The bank has already indicated it will be flexible on the mortgage book included to reduce the funding gap in the business.
An NBNK spokesman said: “If our bid is successful NBNK is going to make a significant contribution to the reform of banking in the UK. It would be a brand-new competitor bank.
“The focus would be on high-quality service and the service that the public wants and deserves and frankly is not getting.”
Although the portfolio includes the TSB brand, it is understood that NBNK, which has prominent Scottish politicians Lord John McFall and Lord Michael Forsyth on its board, would launch a new brand.
The Co-operative is understood to be particularly keen to acquire the Lloyds TSB Scotland portfolio because even after its 2009 purchase of the Britannia building society it only has a handful of branches north of the border.
A successful bid by the Co-op, which has just under 2% of the current account market, would help the Government meet the Independent Commission on Banking’s demand for the creation of a competitor bank with a 6% share of the current account market.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article