Lloyds Banking Group agrees heads of terms for its mandated divestment (‘Verde’)
Lloyds Banking Group plc (‘The Group’) has agreed non-binding heads of terms with the
Co-operative Group plc (‘Co-operative’) for the mandated retail and commercial divestment known as Verde.
Upon completion (estimated by the end of November 2013), the Co-operative is expected to acquire:
António Horta-Osório, Group Chief Executive, said: “Today’s agreement is an important step in meeting our obligations under the mandated sale of our branches. We believe the Co-operative will be a good owner for our business, customers and colleagues, and the combined banking business will be a significant competitor on the high street with nearly 10 per cent of today’s UK branch network.
“In agreeing to move ahead with the Co-operative we provide greater certainty for our customers and for our shareholders. In addition to an upfront consideration, we will also get to share in the future financial performance of the combined banking business which will be an effective challenger with a strong customer focus.”
The Verde branches and customer collateral will be rebranded to TSB from Summer 2013 and will transfer to the Co-operative at completion under this brand.
The Group will continue to work with the Co-operative to agree a sale and purchase agreement, with completion of the divestment expected by the end of November 2013.
The Group is having ongoing constructive discussions on the transaction with the relevant governmental and regulatory bodies, and will now seek formal approval for the terms of the divestment.
Under the heads of terms:
The completion of the divestment is currently expected to be recognised in the Group’s 2013 financial statements. We expect that the loss on disposal will be broadly offset by lower capital requirements from a reduction in the Group’s risk weighted assets. The divestment is not expected to have a material effect on the future profitability of the Group.