Lloyds says no political pressure for branches sale to Co-op
By Matt Scuffham and Steve Slater
LONDON (Reuters) - British bank Lloyds (LLOY.L: Quote) has denied being subject to political pressure to sell hundreds of branches to the Co-operative Group CWSGR.UL, rebutting suggestions of ministerial interference in the controversial sale.
Lloyds has been forced to sell the 632 branches by European regulators as a cost of its taxpayer rescue in 2008, but its choice to sell to Co-op Bank has been slammed after a big hole appeared in the mutual's finances, prompting allegations that politicians had encouraged the choice.
"What the board looked at was financial and the ability to execute (the sale). Those were the only two things we looked at, no political (pressure)," Lloyds Chairman Win Bischoff told a committee of lawmakers on Tuesday.
The Treasury Select Committee quizzed Lloyds executives on their decision, since abandoned, to sell the branches to the Co-op, rather than to a rival start-up bidder NBNK NBNK.L, which said it made a higher offer.
Peter Levene, former chairman of NBNK, said in written evidence to the committee there appeared to have been political interference in the bidding process.
Co-op withdrew its offer to buy the branches in April after it was found to have a capital shortfall, which Britain's regulator has since pegged at 1.5 billion pounds ($2.4 billion).
Ratings agency Moody's on Tuesday piled more pressure on the Co-op, downgrading its senior debt and deposit ratings. The mutual, which has 4.7 million bank customers, is forcing bondholders to take losses under its rescue plan.
Lloyds picked Co-op as the winner of the auction last July and executives said they only realized there was a problem with Co-op's capital strength in December. Continued...