Lloyds Banking Group is reported to be talking to six firms over the sale of 632 UK bank branches. But Reuters quoted people with knowledge of the issue as saying that only two - NBNK and Co-Op Bank - had tabled bids.
European regulators ordered Lloyds to sell the branches as payback for being rescued by the British government during the credit crisis.
The bail-out led to Britain finishing with a 41% stake in Lloyds. Selling the branches, which analysts say could fetch £3 billion, would mark an important first step towards an eventual sale of Britain's state holding.
Virgin Money, National Australia Bank UK and Resolution, the takeover specialist founded by insurance entrepreneur Clive Cowdery, have been in talks with Lloyds but have not committed to a formal bid, sources told Reuters.
The Financial Times reported today that an unnamed American private equity company had made a firm bid for the portfolio.
The Lloyds branch sale is taking place alongside a plan to sell off Northern Rock, the British bank which nearly collapsed during the credit crisis and had to be fully nationalised.
Virgin has said it is looking at the Lloyds branches and Northern Rock, but a source said it felt Northern Rock offered the best proposition.
A major obstacle on the Lloyds branch sale is the need to plug a funding gap for the assets on sale. The portfolio includes assets of £64 billion and liabilities of £32 billion, Lloyds said last month.
Lloyds has said a fall-back option would be to spin off or float the branches if it fails to pull off a sale. Current stock market uncertainty makes a sale its preferred option.
