Lloyds Banking Group (LLOY) Plc won approval from European Union regulators to scale back the amount of assets it has to sell in return for state aid received during the financial crisis.
The European Commission also granted Lloyds more time to carry out the divestments, which led to the creation of an additional stand-alone bank, TSB, after the lender failed to find a buyer for its assets. The commission agreed with the bank’s argument that the shift in approach required an extension of the November 30, 2013 deadline to complete the sale to December 2015.
“Establishing TSB as a stand-alone market player will increase competition in the U.K. market for retail banking services,” Joaquin Almunia, the EU’s antitrust chief, said in an e-mailed statement today. “The proposed changes in the divestment perimeter will enhance TSB’s profitability and preserve its viability as a challenger in the market.”
The European Commission ruled in 2009 that Lloyds, Britain’s biggest mortgage lender, should have to sell part of its business in response to a U.K. government bail-out of more than 20 billion pounds ($34 billion).
The commission’s decision “represents another positive step as the Group works to successfully deliver on its state aid commitments,” the London-based bank said in a statement. “TSB is already operating on the U.K. high street and is proving to be a strong and effective challenger further enhancing competition in the U.K. banking sector.”
The lender is “well-placed” to file for an initial public offering of TSB in the summer, Lloyds said.
The bank also sought to “reduce the perimeter” of the parts of the business to be given to TSB, to prevent it being lumbered with “assets and liabilities that represent a burden in the current environment of low interest rates and higher prudential requirements,” the commission said.
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