Lloyds TSB plans to end talks about a possible takeover of German banks Dresdner or Postbank, it was reported last night.

Lloyds TSB plans to end talks about a possible takeover of German banks Dresdner or Postbank, it was reported last night.

Lloyds was said last month to be considering making a move for Dresdner Bank, owned by insurer Allianz , and Deutsche Postbank, the retail bank at the centre of takeover speculation, although the interest was at an early stage.

Eric Daniels, chief executive, has said he will consider an overseas acquisition, but the German targets are now said not to fit Lloyds' acquisition criteria. Lloyds TSB, owner of Scottish Widows, declined to comment.

Lloyds shares have fallen 17% in the last month, underperforming a weak European bank sector, which analysts have blamed partly on concern it could pursue a German deal. Cazenove commented: "We have no doubt that management would like to find a suitable acquisition but the severe weakness of its share price would seem to restrict its options pro tem."