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Lord Levene calls for MP inquiry into Lloyds/Co-op deal

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Former NBNK chair Lord Peter Levene is calling for a parliamentary inquiry into the bidding process for Lloyds Banking Group’s 632 branches after the deal with Co-operative Bank collapsed this week.

The branch sale, known as Project Verde, is a requirement imposed on Lloyds by the European Commission as part of the bank receiving state aid in 2008. Lloyds has until November 2013 to sell the branches and will now launch an initial public offering and rebrand them as TSB Bank this summer.

Lord Levene, who is also former chairman of Lloyd’s of London, led the failed NBNK bid for the branches but it disbanded in January 2012 after Co-op was chosen. He says the Co-op deal was “incomprehensible” and Government and regulator spending on the process should be examined.

Speaking to Money Marketing, Lord Levene says: “The Co-op deal was not the highest bid and it was not viable so why did they do it? We are talking about a large amount of public money which appears to have been handled very badly and no one has been given a satisfactory explanation of what happened.”

The Lloyds branches make up 7.5 per cent of the branch network and 5 per cent of current accounts. Last year, Santander pulled out of a bid to buy 316 Royal Bank of Scotland branches also ordered by the European Commission under competition rules.

Lord Levene says: “The process was put together when the European Commission decided that branches of Lloyds and NatWest had to be sold and they have spent two years on both and produced nothing.

“There was a clear plan to create a challenger bank and it has been blown out of the water. I do not know what they are going to do now but I am not sure the Government or banks have the stomach to do it now.”

Treasury select committee member and Labour MP Andy Love says it is disappointing the bid collapsed but he would need more information before pushing for a TSC inquiry. He suggests it could be a matter for the public accounts committe which scrutinise public spending.

He says: “We now need to look if there are other ways we can spur competition through new entrants.

“We hope that if the float is successful and if it sets out to grow then it could get up to 10 per cent of the market possibly through further acquisitions so it could make a proper challenger but it could take some time and we need greater competition now.”

Shadow Treasury financial secretary Chris Leslie says: “This is not only bad news for the chancellor but for consumers too. We need more competition in the banking sector – including a greater role for mutuals – to give customers and businesses a better deal.”

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  1. NBNK package was laughable at best,just because they put up the likes of Gary Hoffman as front man they thought that be the clincher. Floatation on the stock market will attract investers from all around the world & will be a huge success tax payers get their money back & they also get another player on the high street,a no brainer!

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