NBNK will close as Co-op wins Lloyds branches

BANK buyout vehicle NBNK will be shut down after Lloyds finally agreed an outline deal to sell 632 branches to the Co-operative.

Lord Levene’s group said there were no other assets to target just hours after it updated the market on a new offer for the Project Verde business.

Lloyds yesterday said it had reached “an understanding” with the Co-op for the branches, which it is being forced to offload under EU state aid rules.

A source said Lloyds and the Co-op are expected to move to “Heads of Agreement” in the next few weeks.

Lloyds said the deal would be based upon it transferring a smaller balance sheet into the new business than previously expected, so there will be no funding gap in terms of assets and liabilities.

The Co-op Bank will treble in size and will have a seven per cent market share. The Verde business has about five million customers and is expected to be sold for £1bn to £1.5bn, below the initial estimate of up to £2bn.

The Treasury said: “Although the deal has not been finalised, we warmly welcome this development as a positive step in the process of delivering the Lloyds divestment and the benefits that will have for competition and the mutuals sector.”