The Co-op is still in exclusive talks with the UK’s biggest mortgage lender, but progress has stalled as the mutual struggles to convince the Financial Services Authority on its offer.
NBNK yesterday said it was offering an “alternative demerger structure” for the Lloyds branches.
Its offer is thought to be worth about £1.5bn, compared with a book value of £2bn.
It said Lloyds shareholders, including the UK Government, would be offered the option of receiving cash or shares in the new bank, or both. It would also underwrite 100 per cent of the de-merger, NBNK said.
“Our objective is to create a new, large challenger bank and brand that will shake up UK high street banking, operating in the interests of customers,” said NBNK chief executive Gary Hoffman, the former Northern Rock CEO.
“I believe we have tabled a compelling proposition that will invigorate competition, provide jobs and is the right solution for taxpayers.”
NBNK’s said its alternative comes with “none of the price uncertainty and additional costs associated with independently listing the business”.
Codenamed Project Verde, the branch network is a similar size to Halifax, and comes with 5.5 million customers and around £64bn of assets. It includes almost 40 Cheltenham & Gloucester and Lloyds TSB branches in Yorkshire.
Last month Lloyds suggested the “highly complex” nature of the deal was delaying the sale to the Co-op.
Lloyds has said sites in Gloucester, Livingston, Birmingham, Sunderland and Swansea will support the Verde business. Around 1,400 staff at these sites will become part of Verde, joining around 5,000 branch staff. It is also creating around 500 new roles in Verde.
NBNK yesterday pledged not to make any redundancies at Verde as part of its offer. It also promised no branch closures and to be the first “no bonus” bank with no short-term incentives for managers.
NBNK chairman Lord Levene, said: “NBNK offers none of the downsides to Lloyds of a standalone IPO.
“We have the right board, management, strategy and experience to run and grow a large scale banking operation and achieve our plans for Verde. Our shareholders are strongly supportive of our objectives.”
NBNK has also been linked with a bid for Yorkshire and Clydesdale banks, but is believed to be prioritising Verde.
A Lloyds spokeswoman said: “We acknowledge the proposals from NBNK but we continue in exclusive talks with the Co-op.” She added Lloyds also continues to prepare for an IPO. The Co-op did not return calls for comment.