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City Grandees Set Out Fresh Lloyds Bid Share
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City Grandees Set Out Fresh Lloyds Bid

Mark Kleinman
April 12, 2012 11:00 AM

Recommend post (0) A group of City grandees led by the former chairman of Lloyd's of London will today put pressure on Lloyds Banking Group to reopen talks over a bid for 632 of the state-backed bank's branches.

I have learned that NBNK Investments, which is chaired by Lord Levene of Portsoken, will issue a statement to the stock exchange outlining the terms of a revised offer for the branches, which will comprise Britain's seventh-largest high street bank when they are sold by Lloyds.

The Co-operative Group has been in exclusive talks to acquire the branches since December, but the discussions have run into trouble amid concerns over governance, financing and the ability of the mutual to integrate such a substantial acquisition.

Lloyds has previously said that if the talks with the Co-op don't result in a deal, it will look to float the branches - known as Project Verde - on the stock market. That route may, given investors' diminishing appetite for bank stocks, be fraught with difficulty, so NBNK's intervention may be well-timed.

As I understand it, NBNK's revised bid is closer to the book value of the Verde assets than the 0.5xbook value at which Lloyds' shares are currently trading. That implies that NBNK, whose chief executive is Gary Hoffman, the former boss of Northern Rock, is bidding in excess of £12.5bn for the Lloyds branches.

I'm told the board of Lloyds is meeting next week, and will discuss the progress of the Verde sale process then.

NBNK declined to comment while Lloyds couldn't be reached for comment.

UPDATE: The NBNK statement says the following:

"The Company’s updated proposal offers an alternative demerger structure to Lloyds giving its shareholders the opportunity to benefit directly from the divestment of Verde. NBNK would underwrite 100% of the Verde asset package demerger, offering Lloyds’s shareholders (including the Government as the largest shareholder) the option of receiving cash directly and/or receiving shares in what would be the UK’s only major, listed organisation solely dedicated to retail and SME banking.

The alternative demerger structure enables Lloyds to separate the Verde business with none of the price uncertainty and additional costs associated with independently listing the business.

NBNK’s proposal contains a commitment to making no redundancies at Verde as part of the acquisition, no branch closures and a service-orientated approach to banking which includes becoming the first ‘no bonus’ bank with no short term incentives for senior managers."

UPDATE: Thanks to readers who spotted the typo in my story. NBNK's bid values the branches at in excess of £1.5bn, not £12.5bn.

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Your Comments

I remember the chairman of Lloyds being interviewed a while ago when the bids first went in. He said he wanted to bring Banking back to the status it should be, the retail banking quite seperate and Customers being able to speak to Bank Managers again. More liquidity retained as in the old days and
I hoped Lloyds would succeed.