New Lloyds boss seeks to sell rather than close branches

TAXPAYER-BACKED Lloyds Banking Group has put on hold further UK branch closures until the end of 2011 as its new boss Antonio Horta-Osorio completes a strategy overhaul.

Mr Horta-Osorio, who took over as chief executive from Eric Daniels yesterday, is also speeding up plans to offload more than 600 branches as part of its commitment to meet state-aid rules.

The huge group has until the end of 2013 to complete the sale – which includes Cheltenham & Gloucester, the TSB brand and Intelligent Finance – and has to identify a buyer before the end of the year.

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But it said it was pressing ahead with the plan after making “excellent” progress on integrating the Halifax Bank of Scotland business, rescued at the height of the financial crisis.

Mr Horta-Osorio – previously head of Santander’s UK business – will announce his plans for the group in the summer, around the end of the bank’s first half in June.

The group’s disposals – dubbed Project Verde – follow a deal to appease European Commission concerns on State aid to sell at least 600 branches, a 4.6 per cent share of the UK current accounts market and up to 19 per cent of the group’s mortgage assets.

This will also include Lloyds TSB Scotland and about 200 Lloyds TSB UK branches.

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It is thought the move to accelerate closures aims to convince the Independent Commission on Banking not to recommend a full-scale break-up of the bank when it reports in the autumn.

The announcement to put branch closures on hold follows more than two years of swingeing job cuts following the HBOS deal.

Over the past 12 months alone, Lloyds has closed seven Halifax, 14 Lloyds TSB and 11 Bank of Scotland branches.

HBOS saddled the group with billions of pounds of bad debts and left Lloyds 41 per cent owned by the Government after a huge state bail-out. Results last week showed its recovery beginning to take hold with pre-tax profits of £2.2bn in 2010 against a £6.3bn loss the previous year.