* Says FSA believes plans satisfactory so far
* Says talks with Lloyds progressing positively
* Lloyds says sharing more information with NBNK
* Regulatory doubts had weighed on NBNK proposal
* Co-operative remains Lloyds' preferred bidder
By Matt Scuffham
LONDON, June 1 Fledgling banking venture NBNK
said the UK financial regulator was happy with its
plans so far to buy 632 branches from Lloyds, paving
the way for it to emerge as a credible alternative to rival
bidder, The Co-op.
NBNK, led by former Northern Rock executive Gary Hoffman,
said it had approached the Financial Services Authority at the
request of Lloyds and addressed regulatory concerns surrounding
"The FSA has confirmed to NBNK that the process of
engagement is satisfactory from its point of view at this
stage," NBNK said on Friday.
Lloyds, which is 40 percent owned by the government
following a 2008 bailout, ended a period of exclusive talks with
the Co-Op in April. However the Co-op remains its preferred
The sale of the branches, code named Project Verde, was
forced upon Lloyds by the European Commission as payback for the
bank receiving about 20 billion pounds ($31 billion) of state
aid during the 2008 financial crisis.
The sale could fetch up to 1.5 billion pounds and create
Britain's seventh-biggest bank, with a 4.6 percent share of
current accounts and 5 percent of mortgages.
NBNK, which is looking to create a new competitor to
Britain's four major banks, said discussions held with Lloyds
since the exclusivity period finished had "progressed
positively" although it has yet to enter formal talks at board
"Having continued to engage constructively with Lloyds, I
believe we have provided sufficient information to enable
negotiations to progress for the sale of Verde to NBNK," Hoffman
said in a statement.
Lloyds confirmed on Friday that it had held a number of
meetings with NBNK, which had clarified parts of its proposal.
"We are now sharing more information with them, so that they
can provide further clarity on other aspects of their offer,"
the bank said.
The Co-op declined to comment on the development.
Lloyds is also preparing plans for a stock market flotation
of the branches and could ask European regulators for an
extension to a November 2013 deadline for the sale if it fails
to find an outright buyer.
The regulatory concerns over NBNK's proposal are
predominantly around the venture's financial strength.
One source told Reuters in April that NBNK had held talks
with Middle Eastern sovereign funds in order to bolster its bid,
in addition to major UK blue chip investors. Its major
institutional backers include Invesco, Aviva and Baillie
NBNK insists that any concerns over its financial firepower
"NBNK's investors have remained supportive of and committed
to its objectives, underlining the company's ability to finance
the acquisition of Verde," it said on Friday.
NBNK made a fresh bid for the Verde branches in April,
saying it was offering an "alternative demerger" plan. It wants
to buy the branches and potentially float them so that Lloyds
shareholders - including the UK taxpayer - can receive cash or
shares in a new listed banking group.
The UK market is dominated by Barclays, HSBC
, RBS and Lloyds, which is Britain's biggest