LONDON, July 4 (Reuters) - Banking start-up NBNK said onThursday its executives had personally handed a document to thechairman of Lloyds Banking Group early last yearspelling out the risks of selling hundreds of branches to arival bidder.
NBNK had made a bid for the 632 branches being sold bypart-nationalised Lloyds, which chose to sell them to Co-opBank. But the deal collapsed in April when it emerged Co-opneeded to plug a 1.5 billion pound ($2.26 billion) capital hole.
The decision by Lloyds to sell the branches to Co-opprompted allegations that politicians - keen to backcustomer-owned financial services businesses, such as Co-op, asan alternative to mainstream banks - had encouraged the choice.
Details of the warning given to Lloyds' chairman WinBischoff were included in supplementary evidence submitted byNBNK to a parliamentary committee which has been investigatingthe failed deal.
Peter Levene, who led NBNK's bid for the branches, said inthe submission that he and NBNK CEO Gary Hoffman handed adocument detailing risks with the Co-op bid to Bischoff at ameeting on Jan. 27, 2012.
The document handed to Bischoff said there was a "high risk"the Co-op deal would fall through, citing its stretched capitalposition and execution risk.
A Lloyds spokesman said: "We have no record or recollectionof receiving this document." He said the bank had given thatmessage to the Treasury Committee.
The Lloyds spokesman said its choice of Co-op Bank "was madeon a purely commercial basis".
Lloyds executives last month told the committee they did notrealise there was a problem with Co-op's capital strength untilDecember 2012 when a revised plan for the integration of the twobusinesses was submitted.
Levene was also critical of Lloyds executives' commentsabout the bidding process to lawmakers and said that showed theydid not understand the bid submitted by NBNK.
Levene said evidence given by Lloyds CEO AntonioHorta-Osorio to the Treasury Committee "neglected to make cleara number of material points" and "failed to represent thequantum and scope of NBNK's final bid."
Both offers had complex structures. Co-op's bid was worthabout 700 million pounds and NBNK's offer may have been just 630million, Lloyds estimated.