UPDATE 1-Lloyds appoints J.P. Morgan, Citi for branch sale

* Says has already seen considerable interest in business

* Says advisors to help raise funding for any buyer
(Adds details, background)

LONDON, March 28 (Reuters) – Lloyds Banking Group Plc
(LLOY.L: Quote, Profile, Research) has appointed U.S. banks JPMorgan Chase & Co (JPM.N: Quote, Profile, Research)
and Citigroup (C.N: Quote, Profile, Research) to oversee the forced sale of 600 branches
triggered by a bailout by British taxpayers at the height of
the financial crisis.

“There has already been considerable interest in the
Divestment Business,” said Antonio Horta-Osorio, whose first
big move as chief executive of the British lender was to
announce on March 1 that he was accelerating the sale.

Lloyds was told by European authorities in November 2009 it
had four years to sell at least 600 branches, 4.6 percent of
the personal current (or checking) account market and 19
percent of its mortgage book to limit competition distortions
after taking a bailout.

Horta-Osorio also highlighted the ability of JPMorgan and
Citi to help any buyer raise the necessary funds.

“The group will now work with the appointed advisers to
leverage their significant experience in funding activity and
provide potential funding arrangements for the buyers of the
Divestment Business,” Lloyds said in a statement on Monday.

The businesses for sale would, on their own, create
Britain’s seventh biggest bank or building society in terms of
current accounts and branches and could be worth over 3 billion
pounds ($4.9 billion), analysts have said.

NBNK Investments Plc (NBNK.L: Quote, Profile, Research), a new banking start-up, has
said it wants to buy the Lloyds branches. Other suitors could
include Virgin Money, National Australia Bank Ltd (NAB.AX: Quote, Profile, Research) or
Spain’s BBVA (BBVA.MC: Quote, Profile, Research). [ID:nLDE68C1FF] [ID:nLDE72M0XP]

Assets on the block include Cheltenham & Gloucester
mortgages, the TSB brand, branches of Lloyds TSB in Scotland
and some in England, and Intelligent Finance.

The bank has estimated the businesses to be sold
contributed about 500 million pounds of pretax profit in 2008
and generated income of about 1.4 billion.

Lloyds is 41 percent owned by British taxpayers after it
was saddled with billions of pounds of losses following the
takeover of troubled rival HBOS in 2008 as part of a rescue
deal brokered by the then Labour government.
(Reporting by Paul Hoskins, editing by Gerald E. McCormick)

UPDATE 1-Lloyds appoints J.P. Morgan, Citi for branch sale