Lloyds Banking Group was ordered by the European Commission to sell the branches

There was news last week that Lloyds Banking Group was ordered by the European Commission to sell the branches. The story is as follows:

The Co-op is close to scooping 632 branches from Lloyds Banking Group for a knockdown £1bn price tag - less than original market estimates.

The board of the mutual will meet next week and is expected to approve a plan to make staged payments to Lloyds over a number of years that would depend on performance.

When Lloyds, which is 40pc owned by the government, put the branches up for sale more than a year ago, it was expected to go for closer to £1.5bn.

The bank was ordered by the European Commission to sell the branches by November 2013 in order to comply with state aid rules after it accepted a £21bn government bailout.

Over the past 12 months bank shares have slipped, and the only other bidder for the branches, a cash shell called NBNK, is being wound up after Co-op and Lloyds entered exclusive talks for the second time last month.

The Lloyds package contains five million customers, which would triple the size of the Co-op's banking arm.

Due to the size of the deal the FSA had looked at regulating the whole of the Co-op, which contains a range of businesses from supermarkets to funeral parlours. However, it is understood to be moving towards just overseeing the banking operations.

My initial thoughts:
1. Not Nice
2. I think European Commission have no rights to sell bank branches even bank is 40% owned by the government.
3. This deal will be very muddy in near future.