Lloyds looking at ways to make its branch sale more attractive
After its injection of state aid during the financial crisis, Lloyds Banking Group needs to sell a number of branches to comply with the EU directive on state aid. Most of the interested parties are companies that do not have a long track record in retail banking, and as a result they would not be eligible to calculate their capital requirements using a Basel II AMA, they have to use the standardised approach instead.
This additional capital requirement is depressing the sale price of the assets, so now Lloyds is lobbying the FSA to have it grant expedited approval to the new owner to use the AMA approach:
Lloyds Banking Group is in early talks with the City regulator about easing the capital burden for prospective buyers of some of its branches in an effort to remove one of the biggest obstacles to the sale
Another great illustration of the paramount importance of regulatory capital on future bank profitability.
