There's no need to rush into a sale of 600 Lloyds branches to Virgin Money, no matter what Sir Richard Branson says
It's good news that Sir Richard Branson's Virgin Money has developed an appetite for expansion. New banking competitors are needed and Virgin would be a serious new owner of either Northern Rock or the 600 branches that Lloyds must sell under orders from Brussels.
But note Branson's mischievous remark on the question of whether Lloyds should be forced by the British government to make further disposals: such a move might "muddy the water" by causing delays, he thinks.
António Horta-Osório will love that. The new Lloyds boss is busy fighting against the proposal from the Vickers commission that a sale of more than 600 branches is needed to make a serious impact on competition in retail banking in Britain.
The commission's interim report was clear: "The current view is that the planned Lloyds Banking Group divestiture is insufficient and that it will have a limited effect on competition unless it is substantially enhanced."
Virgin disagrees and thinks a 5% share of the personal current account market – which is roughly represented by 600 branches – would be enough to create a strong competitor. It's good to hear that Branson is confident (when is he not?) and so anxious to get down to business. But that's not a reason for the government to jettison the commission's analysis without proper discussion. Other would-be banking challengers might welcome the chance to buy more than 600 branches.
Lloyds's takeover of HBOS was a politically inspired deal assembled in a hurry. There's no need to rush the remedy to suit Lloyds and Virgin.