April 12, 2012 / 12:05 PM / in 6 years

NBNK confident of appetite for Lloyds branch IPO

LONDON (Reuters) - British bank venture NBNK NBNK.L expressed confidence that investors would buy into its offer to underwrite a possible demerger and flotation of 632 Lloyds (LLOY.L) retail bank branches, saying returns in the sector were higher than many thought.

“If you invest in Barclays (BARC.L), HSBC (HSBA.L), or RBS (RBS.L) or Lloyds (LLOY.L), then only about 20 pence of every pound you invest goes into UK retail banking. The rest goes into investment banking or asset management or corporate banking or Brazil or Greece or Spain or Italy or whatever,” said NBNK Chief Executive Gary Hoffman.

“Over many years, the returns in UK retail banking have been much higher than group returns. If you can produce a pure UK retail play, with very good ROE (return on equity), without dilution coming from the rest of the group, then it is an attractive proposition for investors,” he added.

Hoffman said NBNK still had to open talks with Lloyds over its offer for the branches, since Lloyds remained in exclusive negotiations with British conglomerate The Co-Op over the deal.

Hoffman added that NBNK could raise the necessary funds from its investors to finance the Lloyds branch deal.

Reporting by Sudip Kar-Gupta; Editing by Sinead Cruise

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