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MPs launch inquiry into failed Co-op/Lloyds branch deal

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The Treasury select committee has launched an inquiry into the failed Co-operative Bank bid for Lloyds Banking Group branches.

The Co-op pulled out of a deal to buy 632 Lloyds branches in April almost 18 months after winning the bid, citing the poor economic climate and regulatory pressures.

The sale was ordered by the European Commission under EU competition rules and was named by Lloyds as Project Verde.

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.

Former NBNK chair Lord Peter Levene, who was a rival bidder for the branches, called for a TSC inquiry into the bid collapse, branding the decision to award them to Co-op “incomprehensible”. He was backed by TSC member Brooks Newmark who also pushed for an inquiry.

MPs will take their first evidence session on 18 June from LBG chairman Sir Winfried Bischoff and chief executive Antonio Horta-Osorio.

Treasury select committee chairman Andrew Tyrie says: “This divestment should be an important opportunity to boost competition in the UK retail banking market. It could have significant benefits for consumers.

“We will want to know how the Co-operative Bank’s bid was allowed to progress to such an advanced stage, why it collapsed and what will now happen to these branches and their customers.”

Following the collapse the Co-op saw its credit rating cut to junk status by Moody’s due to a capital shortfall and chief executive Barry Tootell step down.

The Co-op group has launched a strategic review of the firm and hired ex-HSBC US chief executive Niall Booker as Tootell’s replacement.

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