EU may ask Lloyds, RBS to reduce branch network: report
26 Sep 2009
The European Commission is pressing Lloyds Banking Group and the Royal Bank of Scotland (RBS) to sell off large numbers of their branches because of state aid rules, according to media reports.
Lloyds may be told to reduce its market share by as much as a sixth under European competition rules governing state aid to private companies, reported the Financial Times.
Under EU rules, recipients of government bailouts are usually required to undergo restructuring as a form of compensation.
However, EU competition commissioner Neelie Kroes had yet to make a final decision on the fate of Lloyds, which enlarged its presence in Europe with the acquisition of HBOS at the height of the financial crisis in November 2008 (See: Lloyds takes over HBOS in $21.7 billion deal with British PM Brown's support).
However, Kroes is expected to insist that Lloyds sells off a substantial part of its retail and corporate operations.
Brussels rejected suggestions that Lloyds would have to sell recent merger partner Halifax to comply with the rules, but added it might have to close or sell a number of its 1,000 Halifax branches.
