LONDON -- The shares of Lloyds Banking (LLOY 1.46%) (LYG 1.96%) climbed 1 pece to 52 pence during early London trade this morning after the group said it would rebrand 632 branches as TSB Bank and float the division on the stock market.
The move comes after the Co-operative confirmed it had pulled out of a deal to buy the branches.
Lloyds announced in July last year that the Co-op had agreed non-binding terms to acquire the branches and their 4.8 million customer accounts for 750 million pounds.
The deal, known as Project Verde, had been expected to complete by November and would have taken the Co-op's estate to about 1,000 branches to represent around 10% of the U.K.'s banking network.
The European Commission had instructed Lloyds to sell the branches as part of the state bail-out the bank received during 2009.
Peter Marks, the Co-op's chief executive, said this morning:
Against the backdrop of the current economic environment, the worsened outlook for economic growth and the increasing regulatory requirements on the financial services sector in general, the Verde transaction would not currently deliver a suitable return for our members within a reasonable timeframe and with an acceptable level of risk.
Antonio Horta-Osorio, the chief Executive of Lloyds, responded:
We are well advanced in our plans to bring the Verde business to the UK High Street during the summer through the TSB Bank, and will now proceed with the option to IPO the business, subject to the necessary approvals.
The TSB Bank will be an attractive retail and commercial bank that will have around 630 branches across the UK, a strong management team and will be a real challenger on the high street.
Lloyds said an update on the timing of the flotation of TSB Bank would be given in due course. The bank also confirmed there would be no "direct impacts" to customers as a result of the Co-op deal being called off or the upcoming flotation.
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