Sky News Land Yet Another Business Exclusive

Last Updated on Thursday, 29 October 2009 23:45 Thursday, 29 October 2009 23:45

Sky News’ City Editor Mark Kleinman has just revealed that Lloyds Banking Group is close to agreeing a complicated deal that would involve agreeing to sell Lloyds TSB Scotland, Cheltenham and Gloucester and Intelligent Finance (IF) to satisfy the European Commission.

This could affect thousands of customers at C&G's 164 branches, Lloyds TSB's 185-strong network, plus internet account holders with IF. The Commission is preparing to announce a series of remedies in return for the state aid it has received during the last year. The news follows a Lloyds statement updating the stock market on the bank's negotiations about withdrawing from the Government's toxic asset insurance scheme.

Mark broke the story on air on Sky News and followed with more details in his blog, Kleinman: Mark said: “Lloyds, which has just issued a statement to the stock exchange saying that it is in “advanced discussions” with Brussels about the remedies for the state aid it received during the banking crisis, is ready to offload Intelligent Finance, its online bank, its Lloyds TSB branch network in Scotland as well as Cheltenham & Gloucester.

"In Lloyds' statement, it did not name those particular assets but it has said it does not believe that any potential disposals will have a material affect on the group's finances. This will be seen as good news by Lloyds’ investors as it makes it more likely that Lloyds will be able ultimately to escape the Government's Asset Protection Scheme."

On Wednesday, EU regulators paved the way for part of Northern Rock to be sold off - with the likes of Virgin Money thought to be interested. Any sell-off would lead to a major shake-up of high street banking in the UK - but Kleinman said it was too early to say whether there will be job losses. Kleinman added: "The Government and Brussels are trying to encourage more competition in the UK retail banking sector.

"This means if you carve out Cheltenham & Gloucester, Intelligent Finance and TSB in Scotland, you've got a potentially powerful competitor that could be taken over by one of the aspiring newcomers in the UK banking market.”