A new, standalone British bank under a revived TSB brand could be brought to market after Lloyds Banking Group struggles to complete the sale of its 632-branches known as 'Verde'.
The bank, which is 40% owned by the taxpayer, has to sell the branches to comply with rules on state aid.
The Times reports the lender is thought to be leaning towards a floatation of the branches while retaining "the freedom for a last-minute trade sale if circumstances change".
The Co-operative Group was in line to buy the branches, and triple its banking presence but its board members have expressed concerns about the complexity of the deal. Verde has about 5 million current account customers.
The report said unless there is a breakthrough in the negotiations between Lloyds, Co-op and the Financial Services Authority in the next few days the Lloyds board is expected to press ahead with plans for an initial public offers of Verde next year.
One person familiar with negotiations told The Times: “It feels like about 50-50 whether this deal will go ahead. It really comes down to whether Co-op wants this or not. It’s a huge leap of faith for them.”
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