According to reports appearing in the Sunday Telegraph, the Treasury is seeking to gain advance knowledge on the number of branches the Lloyds banking Group should sell to boost competition.
The finance ministry is seeking advice from the Independent Commission on Banking, the autonomous committee set up last June, on the number of branches that should be put on block before ICB publishes its report in September, the newspaper reported citing senior Treasury sources.
The Lloyds Banking group is required to sell 632 branches to meet European Union competition rules after it acquired HBOS during the financial crisis in 2008. However, the ICB is expected to advice Lloyds Bank to sell more number of branches.
“The move, thought to be the Treasury’s first intervention since establishing the independent commission … would allow potential buyers to be sounded out, and would mean any extra branches … could be wrapped into the existing process”, the newspaper quoted.
No clarifications could be obtained from the treasury on this matter.
The finance ministry is maintaining a fine balance between recouping billions of pounds of public money invested in Lloyds Bank and RBS, and boosting competition in the overcrowded retail banking space.
With the sale of branches of Lloyds – which dominates the retail banking sector with one-third market-share and is 41 percent owned by the taxpayer, the government can raise more than £3 billion, analysts believe.
If no suitable bid were available, a new banking entity could be floated on the stock market, said a spokeswoman for Lloyds. Lloyds is unwilling to sell anything more than stipulated by the EU commission which would leave the bank with a 25 percent market-share, post sales.
Quoting sources, the Sunday Telegraph said investment bankers are giving final touches to the sale documents which are to be sent to ten potential bidders.
The bidders include National Australia Bank, Virgin Money, new venture NBNK, an unnamed Japanese bank and Asian banks.