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NBNK, the bank acquisition vehicle created nearly two years ago by former Lloyd’s of London chairman Lord Levene, is to wind up operations after admitting it can find no bank business to buy.
The shell company, listed on the London Stock Exchange in August 2010, had hoped to become a force in high street banking, raising £50m in its initial public offering and securing promises for as much as £8bn if it had been able to find a suitable acquisition target.
On Wednesday it admitted defeat after Lloyds Banking Group, the UK’s biggest high street lender, announced it was re-entering exclusive talks to sell its portfolio of 630 branches to rival bidder the Co-operative Group.
It said it had burned through more than £30m of that initial funding, “particularly during the elongated Verde [Lloyds branches] process”.
NBNK, backed by several of the UK’s leading asset managers, including Invesco and Aviva, said at the time of its float that it would return its funds to shareholders if it were to fail to make an acquisition within 18 months.
Although the Lloyds deal had been its main focus, it also flirted with offers for other banking assets, including the Northern Rock business that was sold off by the government last year, and the UK businesses of Australia’s NAB.
Gary Hoffman, NBNK’s chief executive, said: “We are disappointed that the door has now been closed on this opportunity, with the result that we will be unable to deliver our vision of banking, bringing a vibrant new challenger to the high street, devoted to providing the level of service that customers want and deserve.”
“We would have provided more local decision making, flexible opening hours, new modern systems and a guarantee of no short-term bonuses – everything we believe that people want.”
The decision was taken as Lloyds said it had made “considerable progress” in its protracted talks with the Co-op and that both sides had reached an understanding about commercial terms of the transaction.
It said this agreement was still subject to satisfactory documentation, approval of the respective boards and further discussions with the regulators and the European Commission, which had forced Lloyds to sell the branches as a condition for a tax-payer loan it received during the financial crisis.
The sale is now understood to include a match of £30bn in assets and liabilities, eradicating a previous funding gap for the branches.
People familiar with the transaction said the proposed smaller balance sheet for Verde – the name Lloyds had given the branches – means that the price could fall below the £1bn minimum that was previously expected.