Firm looks to Middle East for funds
Source: BI-ME with UKPA , Author: Posted by BI-ME staff
Posted: Sun April 29, 2012 4:30 pm

INTERNATIONAL. An investment firm vying with the Co-operative Group to buy 632 bank branches from Lloyds has reportedly turned to Middle East wealth funds in a bid to boost its firepower.

NBNK, headed by former Northern Rock boss Gary Hoffman, has held talks with funds from Qatar and Abu Dhabi in an attempt to persuade them to become 'cornerstone' investors, according to the Sunday Telegraph.

The backing of both or either of the funds - which have major investments in household businesses such as Harrods and EMI - would be a significant boost to NBNK's approval to win over the Lloyds board, the newspaper said.

The development comes days after Lloyds, which is 40% owned by the taxpayer, announced it would allow other parties as well as the Co-op to bid for the business in the wake of renewed interest from NBNK. Lloyds is being forced to offload the branches as a penalty for taking a bailout from the taxpayer.

NBNK turned up the pressure on the Co-op when it recently outlined a proposal to underwrite a flotation of the branches on the stock market to create the UK's first "no bonus bank".

It said its proposal would "create a new, large challenger bank and brand that will shake up UK high street banking" with none of the costs or uncertainties for Lloyds of floating the business itself.

The newspaper said Mr Hoffman has spoken to numerous blue chip UK investors, in addition to the talks he has already had with Invesco, Baillie Gifford, and Aviva, who are all currently shareholders.

Lloyds and the Co-op had been in exclusive talks and were supposed to reach an initial agreement by the end of March. But this was delayed amid questions over whether the Co-op has an experienced team and the right structure to run the enlarged business.

Co-op chief executive Peter Marks recently hit back at critics, saying: "We know how to run a bank." The mutual's board will meet next month to decide whether to press ahead with its offer, it has been reported.

It has said it is still working on its own back-up plans to float the business on the stock market and will provide a further update by the end of June. The assets being sold account for a 4.6% share of the UK current account market and up to 19% of Lloyds' mortgage book, with around five million customers.

 

MIDDLE EAST BUSINESS COMMENT & ANALYSIS

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