Photo: Bloomberg

Photo: Bloomberg

NBNK says submitted Lloyds branch bid

NBNK says submitted Lloyds branch bid

London: New British bank venture NBNK has submitted a second-round bid for some 630 Lloyds bank branches, NBNK confirmed on Thursday, which sources with knowledge of the matter said could be worth 1.5 billion pounds ($2.3 billion).

The auction -- codenamed “Project Verde" -- offers a chance to create Britain’s seventh-biggest bank in one fell swoop.

The sale includes 4.6% of personal current accounts and 5% of the mortgage market, contributing about £500 million of pretax profit in 2008 and income of about £1.4 billion.

Photo: Bloomberg

European regulators ordered Lloyds to sell the branches as payback for having to be bailed out with taxpayers’ money during the credit crisis.

Britain ended up with a 40.6% stake in Lloyds and 83% of Royal Bank of Scotland after rescuing both banks during the credit crisis with taxpayer bailouts, and RBS has also been told to sell off a host of assets.

NBNK faces competition for the Lloyds branches from Sun Capital and Co-Operative Financial Services, although those two have yet to put in formal second-round offers.

A source with knowledge of the matter told Reuters that NBNK would exercise an option to buy fewer mortgages and other loans than were originally on offer, since tough credit market conditions have made it hard for any bidder to borrow on the market to finance the larger portfolio of loans.

Although Sun Capital and Co-Operative Financial Services have not yet submitted second-round bids, Lloyds has not set a deadline which means the two can still put in offers in the weeks to come, a source involved in the process told Reuters this week.

NBNK was set up last year by Peter Levene, chairman of the Lloyd’s of London insurance market.

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