One of China's biggest state-owned banks has requested details of a network of more than 600 Lloyds Banking Group branches as the prelude to a possible offer

One of China's biggest state-owned banks has requested details of a network of more than 600 Lloyds Banking Group branches as the prelude to a possible offer, I have learned.
Bank of China, which is listed on the Hong Kong and Shanghai stock exchanges, is one of up to ten parties which were sent information yesterday about Project Verde, the codename given by Lloyds to the disposal of 4.6 per cent of the British current accounts market.
To be clear, Bank of China's request for the information memorandum does not mean that it will actually table a bid for the branches. Indeed, it may simply be an attempt to obtain further information about the UK retail banking sector.
But some of my senior City contacts have talked for several weeks about the prospect of Bank of China bidding for either the Lloyds branches or Northern Rock as it attempts to deploy part of its surplus liquidity overseas.
Bank of China is one of a handful of large state-owned Chinese banks and is one of the biggest lenders in the world by market value. It's no stranger to the UK banking industry in that Royal Bank of Scotland was a shareholder and strategic partner of Bank of China's for several years (it sold its stake in the wake of its rescue by British taxpayers).
At this stage, the idea of a bid by Bank of China for the Lloyds branches (which include Cheltenham & Gloucester, the Lloyds TSB network in Scotland, and Intelligent Finance, the internet bank) remains speculative. But if it were to become serious, it would add an unexpected name into an auction triggered by Lloyds' receipt of state aid during the banking crisis of 2008.
I can also reveal today that the information memorandum distributed yesterday includes the first acknowledgement from Lloyds that it might need to expand the number of branches it sells because of the stance adopted by the Independent Commission on Banking (ICB).
I'm told that the document contains a clause emphasising that the scale of the divestment might be altered during the sale process.
It was inserted at the request of the Treasury, I understand, although the bank did not raise any objection to its inclusion.
That looks like a pragmatic attitude from Antonio Horta-Osorio, the chief executive of Lloyds, who is fiercely opposed to the ICB's interim recommendation in April that the size of the business it offloads ought to be "substantially enhanced".
People close to the situation have told me today that the clause is standard for a sale document such as this one but that it paves the way for some form of compromise deal to be agreed if the ICB succeeds in convincing Lloyds that the 620-odd branches it's already selling do not amount to a sufficiently powerful business in their own right.
Among the other banks which have also received the Verde information are NBNK Investments, the acquisition vehicle headed by Lord Levene, chairman of Lloyd's of London; National Australia Bank (NAB), the owner of the Clydesdale and Yorkshire operations in the UK; and Virgin Money, Sir Richard Branson's banking business.
As I revealed in March, NAB and NBNK have been holding talks about making a combined offer for the Lloyds assets, with the combined group reversing into NBNK's London stock market listing.
It wouldn't surprise me if George Osborne, the Chancellor, made reference to the Lloyds process in his Mansion House speech on Wednesday, pointing out that efforts to introduce greater competition in British banking were proceeding apace under the Coalition. He may also, as I revealed last month, fire the starting gun on an auction of Northern Rock in the same speech.
Lloyds declined to comment today.