Proposed sale of Lloyds TSB branches, including Louth, collapses

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The planned sale of more than 600 branches of the Lloyds Banking Group to the Co-operative Group, including the branch in Eastgate in Louth, has collapsed.

Part-nationalised Lloyds, which is being forced by Europe to sell the branches after its £20 billion taxpayer bailout during the financial crisis, will now pursue a stock market flotation.

The Co-op has reportedly struggled to plug a £1 billion capital gap needed to complete the takeover.

The Co-op said the deal was not in its members’ best interests and blamed the weak economic outlook and heavy regulatory burdens for the decision.

The branches, known as Project Verde, will be rebranded under the TSB Bank name during the summer.

Lloyds chief executive Antonio Horta-Osorio said he was ‘disappointed’ that the £750 million deal had fell through.

He added: “The TSB Bank will be an attractive retail and commercial bank that will have around 630 branches across the UK, a strong management team and will be a real challenger on the high street.”

Customer-owned food-to-banking group The Co-operative was named preferred bidder for the branches in 2011, and planned to merge them with its network of more than 300 branches.

Peter Marks, Co-operative Group chief executive, said: “After detailed and thorough consideration of all aspects of the Verde transaction, we have decided, at this time, that it is not in the best interests of our members to proceed with the transaction.

“Having worked closely and constructively with Lloyds we are naturally disappointed to have reached this conclusion.

“However, against the backdrop of the current economic environment, the worsened outlook for economic growth and the increasing regulatory requirements on the financial services sector in general, the Verde transaction would not currently deliver a suitable return for our members within a reasonable timeframe and with an acceptable level of risk.”