Lloyds poised to seal branch deal with Co-op at "knock-down price" LLOyds is expected to conclude long-running negotiations next week to sell 632 branches and other assets to the Co-op at a knock-down price. Current market conditions and the lack of realistic options for Lloyds to make the disposal, referred to as Project Verde, mean the price tag is expected to fall well short of the £1.5 billion the business was previously thought to be worth. But recent reports suggest Lloyds could receive payments over a number of years, conditional on the performance of the branches, which would take the total price to around the £1bn mark. The up-front payment is rumoured to be considerably less. The sale of the assets, including more than 180 Lloyds TSB branches in Scotland and the Intelligent Finance internet banking business, was ordered by the European Commission in return for the £17bn taxpayer bail-out the group received during the 2008 financial crisis. The bank had discussions with acquisitions vehicle NBNK and has considered floating the assets as a standalone business but re-started exclusive talks with the Co-op at the end of last month. The Verde assets would triple the Co-op's banking business and previous discussions had floundered amid concerns over the mutual's ability to meet capital and regulatory requirements for a vastly enlarged mortgage book. Those are thought to have been addressed by reducing the number of mortgages sold as part of the package, while the Co-op has been racing to meet other regulatory requirements. The mutual's board is due to meet early next week to finalise and approve the deal, shutting the door on seven months of complex discussions. Details of the agreement are likely to be released shortly after that. Nic Clarke, a banking analyst at Charles Stanley, said time was now running short for Lloyds to complete a sale before the commission's November 2013 deadline, and the market is likely to value the security of a done deal even if the price is less than investors had previously hoped for. A flotation would have to happen next year and who knows what the environment will be like then - it could be even worse than now. The other option is to find another buyer and there are not very many of those about. Obviously this is something that's been imposed, and in these situations you don't want to run out of time. He pointed out that if the deal has indeed been adjusted to include less of the potentially valuable mortgage book, then £1bn looked like a reasonable discount under the circumstances, even if paid over a number of years. "It's all about making the deal possible for the Co-op," he said. Clarke added that, with a number of bigger issues weighing on banking shares, such as the economic outlook and the prospect of more regulation, Lloyds" shares should not be seriously impacted even if the sale is perceived as a poor deal for the part-nationalised lender. Lloyds said yesterday it would not comment on how the disposal was progressing.