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Lloyds rejects Project Verde ‘political pressure’ 18 June 2013

Lloyds Banking Group (LBG) bosses have today denied any political influence was behind the decision to accept the Co-operative Bank’s bid for 632 of its branches.

LBG chairman Sir Winfried Bischoff and chief executive Antonio Horta-Osorio were called to give evidence to the Treasury Select Committee (TSC) as to why the deal collapsed and what the bank plans to do with the branches.

The bank has been forced to sell off the branches by European regulators as a result of its taxpayer bailout in 2008.

A bid of £700m was retracted in April 2013 amid concerns over a £1.5bn hole in the balance sheet of Co-operative Group’s banking arm, first discovered in December 2012, according to LBG.
Horto-Osorio insisted multiple times that the board had acted in “the best interests of the shareholders”, rejecting any form of political pressure to secure the deal.

When questioned by TSC chairman Andrew Tyrie, Bischoff said there was no political influences behind the board’s accepting the Co-operative’s bid, insisting “the board looked at the financials and the ability. Those were the only two things we looked at.”

They also rejected the idea they had entertained a lower bid from start-up NBNK Investments Plc – estimated by Lloyds to have a net value of £630m – in order to drive up the Co-operative’s bid.

Lord Peter Levene, former chairman of NBNK, submitted a statement to the committee that NBNK’s bid had been higher than that of the Co-operative’s, saying there were “a number of messages indicating that there had been significant political involvement leading up to the original decision”.

Horto-Osorio claimed that “the numbers are clear”, and that LBG was “happy for NBNK to win with a competitive bid”, but that the £630m bid represented “worse value and higher risk”.
He also said he discussed the deal with the Minister of State for Work and Pensions, the Chancellor, the Treasury Secretary, and Treasury civil servants.

LBG will now turn to its ‘plan B’ for Project Verde – floating the branches on the stock market under the TSB Bank brand following the Co-op bid’s collapse. Horta-Osorio said the TSB branches will be on the high street “within the next two months”.



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