LLOYDS was forced to push back the deadline for signing its sale agreement with the Co-operative Group yesterday, in the clearest sign yet that its divestment of 632 branches, known as Project Verde, is in danger.
The bank said it is now aiming to clinch the deal with the Co-op in the second quarter of this year rather than the first. Lloyds believes that if it cannot get the contract signed by then, its chances of meeting the European Commission’s end-of-2013 deadline for fully completing the branch sale will be slim.
For now, the bank said yesterday that it is “continuing to prepare for a divestment through an initial public offering (IPO)” alongside the sale, in case the deal collapses.
In effect, that means that Lloyds is preparing the branches to be a standalone bank. It has now kicked off hiring for 500 extra staff and is setting up phone centres for the business.
The deal is being held up by the FSA’s detailed interrogation of the Co-operative Group. A source close to the deal said the FSA’s demands could involve legal changes to the group’s structure to ensure its financial services arm is capitalised separately. It is also querying whether Co-operative Financial Services has a sufficiently experienced management team in place.