Lloyds's mass branch sale to Co-op proves 'complex'

Lloyds has said that it will update the market on the progress being made on its sale of hundreds of branches to The Co-operative Group (Co-op) in the second quarter due to the 'complex' nature of the deal.

The European Commisson-mandated divestment of 632 retail and commercial branches, known as Project Verde, is continuing to make good progress, Lloyds said on Thursday, and key operational sites will join the Verde business to provide telephony, banking operations and mortgage centre support.

While Lloyds's preference is still to offload Verde to Co-op, it will create around 500 new roles in the unit. When the bank chose Co-op as the preferred bidder back in December, it said that it aimed to agree on heads of terms by the end of the first quarter. However, the group admitted today that "given that this is a substantial business and a highly complex transaction," a further update will not come until next quarter.

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Alison Brittain, Group Director of Lloyd's Retail Division, said that today's addition of operational sites "represents the next step in building the Verde business following last year's branch network and management team announcement, and marks a significant milestone in building a fully operational challenger bank, well positioned for a successful future."

These sites are in five UK locations - Gloucester, Livingston, Birmingham, Sunderland and Swansea - and around 1,400 colleagues in these locations will become part of the Verde business, joining around 5,000 branch staff.

The bank is continuing to progress an initial public offering (IPO) of Verde as an alternative to a direct sale.

The transfer of the business is expected to complete before the end of next year, in line with the EC-mandated timescale, the group said.

Shares in Lloyds were down 1.83% at 35.21p before the close on Thursday.

BC