NBNK says Lloyds talks continue

The sale could fetch up to £1.5bn and create Britain’s seventh-biggest bank, with a 4.6 per cent share of current accounts and a five per cent share of mortgages.

The UK market is dominated by four major players, Barclays, HSBC, RBS and Lloyds.

Lloyds, which is 40 per cent owned by the Government, ended a period of exclusive talks with The Co-Operative Group in April, paving the way for NBNK, which is run by former Northern Rock executive Gary Hoffman, as an alternative bidder.

The sale of the branches, code named Project Verde, was forced upon Lloyds by the European Commission as payback for the bank receiving state aid during the 2008 financial crisis.

“NBNK has been in discussions with Lloyds following its renewed offer for the Verde asset package. These discussions and meetings have progressed positively,” NBNK said.

NBNK confirmed that it had presented its plans to the Financial Services Authority, the UK’s financial regulator, at the request of Lloyds. Lloyds’ management has indicated that it will not fully engage in discussions with NBNK unless it is confident NBNK can get regulatory approval.

“The FSA has confirmed to NBNK that the process of engagement is satisfactory from its point of view at this stage,” NBNK said.