NBNK Takes the Lead on Lloyds Branch Deal

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NBNK Investments (LSE:NBNK), an investment vehicle focused on domestic banking, appears to have become the leading bidder for 632 Lloyds Banking Group branches.  Lloyds is attempting to sell the branches as a condition of being bailed out by the government in 2008.

NBNK is reportedly willing to bid between £1.5 million and £2 million according to sources.

In December, Lloyds announced that the Co-Operative Group was its preferred bidder. However, the deal (called Project Verde) has persistently been bogged down by regulatory issues. In turn, Co-Operative CEO Peter Marks appears increasingly doubtful that his company will pull off the deal, indicating that regulation as well as the general economic climate are unfavorable at the moment.

Should NBNK purchase the branches, it would use what it called an “alternative demerger structure” to compensate shareholders through a mixture of cash and shares.

Previously, Lloyds had floated the idea of an initial public offering for the Project Verde branches should the Co-Operative Group not be able to complete the deal.

Lord Levene believes his company’s approach to be be more favorable. “NBNK offers none of the downsides to Lloyds of a standalone IPO. We have the right Board, management, strategy and experience to run and grow a large scale banking operation and achieve our plans for Verde. Our shareholders are strongly supportive of our objectives,” said Levene.

Company Statement

Gary Hoffman, Chief Executive of NBNK, believes the group can become a formidable opponent to established U.K. lenders should the deal succeed. “Our objective is to create a new, large challenger bank and brand that will shake-up UK high street banking, operating in the interests of customers,” said Hoffman.  “I believe we have tabled a compelling proposition that will invigorate competition, provide jobs and is the right solution for taxpayers,” he added.

Lloyds’ board of directors will meet next week to discuss its options.

Company Spotlight

NBNK Investments plc is an AIM-listed company which focuses on domestic banking in the United Kingdom.

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