THE Co-operative group has moved closer to sealing a deal for 632 Lloyds branches after the taxpayer-backed bank slashed its selling price.
Lloyds is thought to be willing to cut the price by up to half of the £1.5bn to £2bn expected as bank values plunge. Hopes of floating the Project Verde branches appear to be receding as capital markets remain in turmoil.
The board of Lloyds is expected to meet on Wednesday before it issues an update to the market at the end of June. A deal with the Co-op would make a major comeback for the mutual, whose bid suffered a blow when a period of exclusive talks ended without conclusion in late April, opening the way for takeover vehicle NBNK to re-enter the process. Since then the Co-op has been working to overcome FSA concerns over its level of management experience, governance and technology.
Under the terms of the deal the team of Lloyds executives running the Verde business could transfer to the Co-op, which would continue to use the larger bank’s technology platform.
Lloyds is being forced to sell the branches under EU state rules by November 2013. The bank said it would not comment on “speculation”, adding: “We have made clear that Co-op is our preferred bidder and are pursuing a dual track process for the initial public offering option alongside a sale. We will provide an update at the end of Q2 on this.”
The Co-op declined to comment.