Top retail banks set for shake-up

Lloyds, whose merger with rival HBOS was brokered by the UK government last year, could get off more lightly.

It is set to be told to sell its Cheltenham & Gloucester branch network, Lloyds TSB Scotland and Internet banking unit Intelligent Finance, sources familiar with the matter have said.

Crucially, it is set to keep its Halifax mortgage brand.

The UK government has indicated it could close off the sales of these assets to existing entrants, a move it hopes will encourage new players and more competition.

Virgin Group said on Monday it was interested in looking at assets of the three rescued banks, including Northern Rock.

Britain's leading retailer Tesco , as well as overseas banks Santander , owner of Abbey, and National Australia Bank , are also possible suitors.

For a graph on bank share performance, click on:

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(Additional reporting by David Sheppard; Editing by Greg Mahlich and Carol Bishopric)