The plan was to offload the branches by selling them before 2012.
But a lack of interest in the assets could now push Lloyds towards an alternative plan to float them.
And insiders say that any float would probably necessitate waiting at least a year for capital markets to recover from their current precarious state.
“You could see them waiting two years for the market to get better,” said a source familiar with the situation.
However, waiting too long could push it close to EU regulators’ November 2013 deadline for selling the branches. Some bankers in the industry think Lloyds will have to apply for an extension to the deadline.