Lloyds denies Co-op deal pressure

LLOYDS Banking Group bosses denied political pressure to accept the Co-operative Bank’s ill-fated £700m bid for its branches, insisting they acted in shareholders’ interests.

LLOYDS Banking Group bosses denied political pressure to accept the Co-operative Bank’s ill-fated £700m bid for its branches, insisting they acted in shareholders’ interests.

In a hearing with MPs over the collapse of the branch deal, Lloyds chairman Sir Win Bischoff said there was “no political interference or contact” surrounding the decision to choose the Co-operative over the two other final bidders.

The Co-op pulled out of the branch takeover in April over fears about the strength of its banking arm’s balance sheet.

Moody’s has delivered another blow to the Co-op Bank, slashing its rating on the group after details of its aims to plug a £1.5bn hole in its finances, citing doubts over the group’s plans.

Sir Win and Lloyds chief executive Antonio Horta-Osorio revealed they discovered a capital shortfall at the Co-op in December 2012 and were “skeptical” it could be plugged in time for the branch sale in March. They said they decided to give the Co-op more time.

MPs on the Treasury Select Committee grilled the Lloyds chiefs amid concerns of political interference over the decision to choose the Co-op over rival bidders, investment group NBNK and Sun Capital.

Lord Levene, who chaired the NBNK bid, claimed in a written statement there had been “significant political involvement leading up to the original decision” in favour of a bid from a mutual. He added he was advised the decision was “based on an indication from senior politicians within the Coalition that the Co-op deal was to be the preferred and definitive solution”.

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