Lloyds starts the big sell-off of 600 branches

Formal sales documents are due to be sent out today for the 600-plus Lloyds Banking Group branches which are to be sold off.

If the sale fails to take place, for whatever reason, Lloyds will spin the branches off as a new, separate bank, to be headed by Paul Pester, appointed last month to run the branches that have been earmarked for sale.

Pester joined Lloyds from Santander and was previous CEO of Virgin Money.

The disposal is taking place as a condition, set by European regulations, of the taxpayer funded bail-out of Lloyds.

“We will look for a buyer, and if we need to, the IPO option is there,” a spokeswoman for Lloyds said.

The branches could raise over £3bn and likely bidders include Virgin Money, new UK bank venture NBNK National Australia Bank, and Tesco.

Lloyds chief executive Antonio Horta-Osorio said: “We will have serious indications of interest by the end of July.”

Lloyds is coming under pressure from the Independent Banking Commission to sell off ‘significantly’ more branches, but Horta-Osorio said there was overwhelming evidence that the sale of 600 branches would be sufficient.

He told the Treasury Select Committee this week: “We see no evidence that justifies the divestment. Our board strongly believes this is against the interests of our customers and our shareholders, including the taxpayer.”