Speaking at a Treasury Select Committee hearing, Horta-Osório said there was “overwhelming evidence” that the branch sell off, as ordered by the European Commission, would create a “credible and viable competitor”.
The ICB recommended in its preliminary report in April that Lloyds should be forced to sell significantly more branches than the 600 already earmarked.
However, Horta-Osório said: “We see no evidence that justifies the divestment. Our board strongly believes this is against the interests of our customers and our shareholders, including the taxpayer. We are engaging with the Commission and seeking to see evidence. It is early days.”
He highlighted that the EC believes the divestment was enough to create a “serious challenger” with 5% market share.
In addition, Horta-Osório highlighted that confirmed potential bidders, including Sir Richard Branson of Virgin Money, and Lord Leven and Gary Hoffman from NBNK Investments, believe the number is sufficient.
Indeed, both companies have publically said that increasing the scale of the sell-off would delay matters and prove counter-productive. Hoffman, former chief executive of Northern Rock, recently said that the existing sale would create a “formidable competitor” to Britain’s big banks.
Horta-Osório told the TSC that, as yet, the ICB has not given an idea of the additional divestment it wishes to see or whether this will consist of branches or other types of liabilities or assets.
Nevertheless, he confirmed that the sale process has begun. He explained to the TSC that the timetable for completion was not long and his personal experience at Santander of buying RBS branches showed how complex a process it is.
The ICB is due to publish its final recommendations to the government in September.
