Financial News

  • 11 December 2013, 8:40

Levene Poised To Vent Fury Over Lloyds Deal

The Peer who led a thwarted bid to create a new high street banking giant will tell MPs next month that ministers were guilty of unacceptable interference in order to promote a rival bid from the Co-operative Group.

Sky News has learnt that Lord Levene, who chaired NBNK Investments, a specialist acquisition vehicle, has been asked to give evidence to the Treasury Select Committee on January 14 as part of its inquiry into the sale of more than 630 Lloyds Banking Group branches.

Lord Levene will appear alongside Gary Hoffman, the former chief executive of NBNK, and the two men are expected to make a series of fresh allegations about the behaviour of Government ministers including Mark Hoban, the then City minister, and Sir Win Bischoff, the outgoing chairman of Lloyds.

The session will be the latest in what has developed into a crucial inquiry into the collapse of the Co-op's acquisition of the 632 Lloyds branches and the governance of the mutual's banking arm.

It has taken on greater significance since the emergence of the scandal surrounding Paul Flowers, the former Co-op Bank chairman.

Lord Levene has repeatedly claimed that NBNK made a superior financial offer for the network, codenamed Verde, which Lloyds and the Government have disputed.

He is expected to divulge further details of a meeting he held with Lord King, at which the then Governor of the Bank of England told him that NBNK would have no chance of securing the Lloyds deal because of a political preference for the Co-op's bid.

Last week, Sky News revealed that a number of NBNK shareholders were pressing the vehicle's board to consider pursuing legal action against Lloyds or the Government because of suggestions that the auction did not offer NBNK "a level playing field" against the Co-op's bid.

Lord Levene is also likely to refer in detail to a note that he handed to Sir Win relating to the flaws in the Co-op's bid. The Lloyds chairman has said he had no recollection of receiving the memo.

In a statement issued last week, Lloyds said: "The bidding process for the Verde business was assessed on a fair and open basis. The Lloyds board made the decision to proceed with the Co-op based on value and certainty.

"They chose to proceed with a business that had an existing franchise, branch network and a banking licence.

"The Group also maintained a Plan B - an IPO (initial public offering) of Verde. The first phase of that completed in September with TSB on the UK high streets."

Senior City sources believe that one of the motivations for favouring a Co-op deal was that the well-capitalised Verde network would help to ease the mutual's difficulties over IT systems, management inexperience and doubts about the robustness of its capital position.

A series of probes now awaits the Co-op and some of its former directors, with the Financial Conduct Authority and Prudential Regulation Authority considering whether to launch formal enforcement investigations.

A separate probe commissioned by the Treasury and undertaken by an as-yet unidentified figure from the world of banking or law will also take place.

Lord Levene could not be reached for comment, while a spokesman for the Treasury Select Committee declined to comment.