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King Denies Saying Lloyds Co-Op Deal Was ‘Political’

Former Bank of England Governor Mervyn King denied saying Lloyds Banking Group Plc (LLOY)’s plan to sell branches to Co-Operative Bank Plc was “political,” contradicting Peter Levene, whose NBNK Investments Plc (NBNK) lost out in the bidding.

Levene and his partners “were of the view that the government had pressured LBG into accepting the Co-operative Bank bid,” King said in a March 12 letter to Treasury Committee published today. “I was concerned to know whether they had evidence of that. They told me they did not.”

Levene, 72, testified to lawmakers in January that King, 65, told him in May 2012 the decision to choose Co-Operative Bank over NBNK was a “political decision” and that he should talk to the politicians if he wanted to resurrect his bid.

NBNK, created in 2010 to acquire bank assets, lost out to Co-Operative Bank to buy 632 branches of Lloyds in 2012. Co-Operative Bank abandoned its bid last year, disclosed a 1.5 billion-pound ($2.5 billion) capital shortfall and faces a formal investigation by regulators amid allegations its former chairman bought drugs.

“Although it seemed to me that the government wished to ensure that, if it were possible, a plausible bid from the Co-operative Bank was able to be considered alongside other bids, that was a far cry from any improper conduct in the bidding process,” King said in the letter. “Had I received evidence of improper behavior I would have raised that with the regulator, the government and, if necessary, Parliament.”

To contact the reporter on this story: Gavin Finch in London at gfinch@bloomberg.net

To contact the editors responsible for this story: Edward Evans at eevans3@bloomberg.net Steve Bailey

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