EU could force Lloyds to sell Cleri Med or Scot Wids

Lloyds Banking Group has warned that the the European Commission could force a restructuring of the business, meaning it could be required to sell Scottish Widows or Clerical Medical, due to its receipt of state aid.

Press reports say Clive Cowdery’s consolidation vehicle Resolution could revive its interest in Clerical Medical and Scottish Widows if Lloyds was forced to dispose of assets by Europe.

In a announcement to shareholders, Lloyds said that in order to qualify for receipt of state aid via the asset protection scheme, it expects to agree a forward plan for European Commission approval which would involve “the cessation or disposal of certain parts of the business”.

It goes on to say: “The group’s participation in the Government asset protection scheme will also be subject to obtaining regulatory clearances and state aid clearance from the European Commission for the scheme.

“It is currently uncertain whether such state aid clearance will be obtained and, if it is obtained, it may require the group to undertake a restructuring which may be materially adverse to the interests of the group.”

A spokesman for the group adds: “We are working closely with the Government on this issue. We believe that the success of our company is in the interests of our shareholders but also the stability of the UK banking system as a whole. We are already working towards a situation where state aid is no longer required.”

A Resolution Limited spokesman says: “We have said that we would look at any life assurance or asset management assets that come up for sale. At the moment, we do not know whether Clerical Medical or Scottish Widows will be up for sale. This is very speculative.”

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