Only NBNK and Co-operative Financial Services made formal offers ahead of the deadline, which has prompted Lloyds’ advisers to consider a possible float of the branches as separate business, the Sunday Telegraph said.
This could involve handing shareholders an equity stake in the 632 outlets – which largely consists of the TSB and Cheltenham and Gloucester brands – and splitting them off from the rest of the bank.
Lloyds is being forced to divest the branches by the European Union in return for the £20bn in state aid it received following the 2008 credit crisis.
New chief executive Antonio Horta-Osorio last month pledged to speed up the sale in a move to make his mark on the bank as part of a strategic review that included 15,000 job cuts by 2014 and plans to revitalise the Halifax brand.
Virgin Money, which previously had expressed an interest in both Lloyds and Northern Rock, which the Government is looking to sell, is said to have asked for more details.
Another potential bidder, National Australia Bank – which owns Yorkshire Bank – has also reserved its position ahead of a possible offer later.
Lloyds had hoped to generate up to £4bn from a sale and, because of that, is said still to prefer a disposal, especially as a demerger could be complicated as the Government would end up with a 41 per cent stake in any spin-off to match its current stake in the bank.
Another option said to be under consideration is to postpone the sale.
The bank has a deadline of November 2013 to finalise a deal.
Yesterday, a Lloyds Banking Group spokesman told the Yorkshire Post: “A dual track process has always been part of how we’ve presented it to the market. We have received a number of credible proposals.”
The Yorkshire Post also understands that Lloyds is talking to a number of organisations who are interested in the business.
Last week, it was revealed that the sale of the Government’s stake in Royal Bank of Scotland and Lloyds Banking Group was unlikely to take place until there was more certainty over the regulations they will face.
UK Financial Investments (UKFI), which manages the Government’s 41 per cent stake in Lloyds and 83 per cent holding in RBS, said in its annual report that it would increasingly focus on how to sell the investments as part of the largest ever privatisation programme in the UK.
But it added that greater regulatory certainty was needed to create a stable trading environment and allow the City to put a value on the businesses.