Time running out for Lloyds in branch sale
The 632 Lloyds branches must be sold under state aid rules set out by the EU
21 March 2012
Lloyds Banking Group has just seven more working days if it is to meet its promise to update the City by the end of the first quarter of 2012 on talks about selling 632 of its branches to Co-operative Bank.
In December, when the bank selected the Co-op as the preferred bidder for the branches, it said its aim was to “agree heads of terms by the end of Q1 2012″. The branches must be sold under state aid rules set out by the EU and Lloyds has made clear that it is continuing to “progress” a potential stock market flotation in case the deal falls through. A continuation of the informal deadline for talks with the Co-op is likely to be needed to allow all the complex issues to be ironed out.
While the market awaits details of the sale, Lloyds raised £170m from shareholders today through an issue of new shares intended to raise cash to pay holders of certain types of its bonds.
It is not exactly a large sum for a bank that received a £20bn bailout, but it does provide a small psychological boost for the management: on issuing the new shares, the bank has managed to dilute the Treasury’s stake to below 40% to 39.75% – one way at least to reduce the taxpayer’s stake in the bailed-out bank. Although at this rate, it would take 80 years to extricate the taxpayer completely.