LLOYDS Banking Group has named the Co-operative as its preferred choice to buy the 632 branches it is selling under European competition rules.
The taxpayer-backed bank will now enter into exclusive talks with the Co-op, which beat off competition in the auction from NBNK Investments, a takeover vehicle run by former Northern Rock boss Gary Hoffman.
In Huddersfield, Lloyds has branches at Westgate and Cloth Hall Street while the Co-op has a branch at Victoria Lane.
The sale update came as Lloyds said chief executive Antonio Horta-Osorio would return to his job on January 9 after a period off work with exhaustion.
Lloyds is being forced to divest the branches because of the £20bn in state aid it received following the 2008 financial crisis.
The assets being sold account for a 4.6% share of the UK current account market and up to 19% of the group’s mortgage book. There are 5m customers and an estimated 9,000 employees.
The disposal plan is seen as a way of introducing a stronger challenger to the big five banking groups.
The bids by the Co-op and NBNK are thought to have been in the region of £1.5bn, but the Co-op was seen as slight favourite because it already runs a sizeable bank.
It acquired Britannia in 2009 and now has 343 branches and 6.5m customers, including in current accounts, mortgages and credit cards.
Co-op chief executive Peter Marks said a deal would “significantly strengthen” its position in relationship banking in the UK.
The Building Societies Association said it welcomed the potential expansion of the mutual sector in the banking market.
Director general Adrian Coles said: “Quoted banks often put the interests of shareholders above those of customers.
“All of our research shows that mutuals offer a better customer service – this change will markedly increase the number of branches in the high street that are more interested in customer service than shareholder return.”
Business Secretary Vince Cable said: “If successful, the bid will create a substantial new presence on UK high streets for a mutually-owned bank with high ethical standards and a track record of good service to customers. This will boost competition and the choices available to both consumers and businesses”.
