s difficult not to feel a smidgen of sympathy for Lloyds Banking Group, instructed, as it has been, to sell 632 branches under state aid rules in the middle of a major economic slowdown.
For one thing, the one financial alternative to a trade sale, an IPO, is virtually out of the question given the parlous state of the new issues market.
For another, the Lloyds strategy of pursuing the sale despite ever decreasing offers for its branches has been questioned by one of its rivals. Executives at National Australia Bank recently made clear they were not prepared to offload their UK operations, including Clydesdale Bank, for a low-ball price. Group finance director Mark Joiner told Reuters it was a “rotten time” to sell. For the time being Lloyds is determined to press ahead with the deal rather than return to Brussels, cap in hand, and argue for an extension of the time period.
Lloyds has three interested bidders, with Lord Levene’s NBNK putting in the first offer, at £1.5bn against a book value of £2.4bn. The Co-operative Bank and Hugh Osmond’s Sun Capital vehicle remain the other two interested parties.
Those close to Lloyds say the group will press ahead. It wants clarity going forward and its new management team is dead set on dealing with legacy issues such as this one.
But if markets deteriorate and the bidders try to chip away further at the price or some of the other details, then all bets are off.