Lloyds Banking Group and the Co-operative Group (Co-op) have reported an “understanding on the commercial terms” for the Verde transaction.

This refers to the sale of 632 branches that the group needs to divest itself of due to competition rules. It represents 6% of the UK branch network and, when combined with the Co-op business, around 7% of UK current accounts.

This is subject to agreeing satisfactory documentation, the approval of their respective boards, and further discussions with the FSA, HMT and the European Commission.

During this final phase of the discussions, and in order to proceed to ‘Heads of Agreement’, negotiations with the Co-op will proceed on an exclusive basis.

NBNK Investments plc, the other business interested in the Verde sale, says it now expects to commence steps to wind-up the company and seek cancellation from AIM.

Gary Hoffman, NBNK’s chief executive, said: “We are disappointed that the door has now been closed on this opportunity, with the result that we will be unable to deliver our vision of banking, bringing a vibrant new challenger to the high street, devoted to providing the level of service that customers want and deserve.

“We would have provided more local decision making, flexible opening hours, new modern systems and a guarantee of no short term bonuses – everything we believe that people want.”