Lloyds Banking Group has said it may have to float 600 branches on the stock market if no one comes forward to buy them.
The European Commission has given Lloyds, which is 42 per cent owned by taxpayers, four years to sell the branches, which it was ordered to separate from as the price for receiving state aid at the peak of the financial crisis.
Dozens of banks, including RBS and Santander, are being forced to sell assets but fears have been mounting that it will struggle to find a buyer.
Instead the banking group has said it may float the branches on the stock market, creating a separate British bank worth an estimated market value of between £3 billion and £4 billion.
And, according to The Times, a stock-market flotation of the Lloyds business is likely to involve incentives to encourage members of the public to buy shares — possibly at a large discount.
The package of businesses up for sale includes former TSB branches in Scotland, large parts of its Cheltenham & Gloucester network, its internet bank, Intelligent Finance, and £65 billion of customer mortgages.
However, In a statement to newswire Reuters Lloyds said that this would be a last resort: “The group has until November 2013 to complete the divestment program agreed with the EU. We are therefore only in the preliminary stages of this process.
"Our objective is to sell this business to a third party rather than to float it."
The news comes as The Future of Banking Commission unveiled a new report last week with 39 recommendations aimed at making banks safer and more accountable for their actions.
© Fair Investment Company Ltd