Heads of Terms announcement

The transfer of part of our business to a new owner.

Update - 19 July 2012

What is happening?
As a result of the state aid received by Lloyds Banking Group in 2009, the European Commission (EC) ruled that we should sell part of our business to a new owner. The aim of the ruling is to increase competition and customer choice in the UK banking sector. So we’re transferring part of our business, including some of our branches and most of the accounts held at them, to a new owner.

On 19 July 2012, the Group announced that it has agreed Heads of Terms with The Co-operative Group for the sale of part of our business. The Heads of Terms is a document that sets out the main terms agreed in principle between Lloyds Banking Group and The Co-operative Group.

Agreeing Heads of Terms is a very important step in our negotiations with The Co-operative Group. It shows the significant progress we have made with our negotiations as well as the commitment of both parties to complete the sale.

The Heads of Terms we have reached with The Co-operative Group is subject to further discussions and final agreement with the EC, FSA and the Treasury before we can agree a Sale & Purchase Agreement (SPA).

You don’t need to do anything differently as there will be no changes for some time. We will keep you up to date at every stage and you can carry on banking just as you do now. We will write to customers who are directly affected by the transfer to let you know what the changes mean.

The Co-operative Group
After careful consideration we have selected The Co-operative Group as the overall best buyer for part of our business. In The Co-operative’s established banking business, we believe we have found a safe home for our valued customers and colleagues. We are confident that The Co-operative Group will offer an excellent experience to both our customers and our colleagues and enable us to deliver on our commitments to the European Commission.

The combination of The Co-operative Bank with part of our business will signal an important change for the UK financial services industry. After the transfer of part of our business, The Co-operative Bank will have a network of almost 1,000 branches across its portfolio of banking brands and will have an approximate 7% share of the current account market.

The TSB Brand
The part of our business which is transferring to The Co-operative will be rebranded to TSB ahead of the transfer. So, we will also need to rebrand our remaining network of 1,300 Lloyds TSB branches. We will keep you updated on our plans.

Next steps
We’ll continue to work with The Co-operative Group to progress with preparing part of our business for the transfer. The Heads of Terms we have reached with The Co-operative Group is subject to further discussions with the EC, FSA and the Treasury before we can move to the next stage of the process, which is negotiating and signing a Sale & Purchase Agreement (SPA).  The SPA is a legally binding contract that enables us to progress to ‘completing’ the sale, and the main contractual document governing the sale.  Once signed, both parties will be bound to complete the transfer, subject to certain conditions.

If we reach a formal agreement with The Co-operative Group, some of our branches and accounts will become part of The Co-operative Group’s banking business. If you are directly affected by the transfer we’ll be writing to you after the SPA is signed, to let you know what the transfer means for you.

You don’t need to do anything
You don’t need to do anything differently as there will be no changes for some time and we will keep you up to date at every stage. Branches will not close as part of the transfer, and you can carry on banking just as you do now. We will write to customers who are directly affected by the transfer to let you know what the changes mean for you.

You can continue to bank with us just as you do today through your branch, Internet Banking and Telephone Banking. We will keep you updated throughout the process and if you are directly affected by the transfer, we will let you know of any changes well before they happen.

Once the transfer is complete, the customers and staff in the selected branches will stay with those branches - so the same staff will still be there to provide you with the same level of service, in the same place, just under new ownership.

Continuing to look after our customers
Our branch staff will carry on providing the same level of service that you’re used to, and you can carry on your day-to-day banking in the same way.

No branches are closing as part of the transfer and after the transfer is complete, Lloyds TSB will still have a strong network of over 1,300 branches in England and Wales and we’ll continue to offer a wide range of products and services to our customers.