TSB banks to float on stock market
More than 600 Lloyds bank branches will float on the stock market under the TSB Bank brand after a deal to sell them to The Co-operative Group collapsed.
The Co-op has admitted defeat in its plans to create a major customer-owned rival to the big four high street banks, blaming the weak economy and heavy regulatory burdens.
That leaves part-nationalised Lloyds Banking Group racing to complete an initial public offering (IPO) for the 632 branches ahead of a year-end deadline.
It also gives the Government a major headache over its plans to increase banking diversity, particularly in light of Royal Bank of Scotland's failure to sell 316 branches to Santander.
The Co-op had claimed the deal would be the "biggest shake-up in high street banking in a generation", creating a bank with almost 1,000 branches and 11 million customers. But the mutual has walked away, saying the deal was not in the best interests of its customers.
Chris Leslie, Labour's shadow financial secretary to the Treasury, said: "This is not only bad news for the Chancellor but for consumers too. We need more competition in the banking sector - including a greater role for mutuals - to give customers and businesses a better deal.
It is thought a stock market flotation of the TSB branches, known as Project Verde, could raise more than £1 billion for Lloyds. That would be higher than the reported £750 million the Co-op had been due to pay.
Lloyds is likely to ask the European Commission for an extension to its deadline, and could opt to sell TSB in tranches of shares. It will give an update on the IPO in "due course" as it seeks regulatory and EC approval.
All branches, including Cheltenham & Gloucester outlets, will be rebranded under the TSB Bank name during the summer. Brussels is forcing the sale after Lloyds' £20 billion taxpayer bailout in 2008 left the state holding 39% of its shares.
Lloyds chief executive Antonio Horta-Osorio and Co-op counterpart Peter Marks both said they were "disappointed" the deal had fallen through. But Mr Horta-Osorio insisted Lloyds has made good progress with its flotation plans, which it has been pursuing in tandem in case the deal collapsed.