Lloyds Banking Group PLC, in a worst-case scenario, could end up having to pay for the disposal of its retail banking assets if it does not find a buyer within the four-year time frame, it disclosed in a prospectus.

"In particular, should the group fail to complete the disposal of the retail banking business that the group expects to be required to divest within four years, a divestiture trustee would be appointed to conduct the sale, with a mandate to complete the disposal with no minimum price (including at a negative price)," the U.K. bank said under "risk factors" in its prospectus detailing plans to raise money from shareholders.

On Tuesday, the 43%-government-owned bank unveiled a plan to free itself from increased government assistance by raising capital, instead of participating in an expensive program to insure billions in toxic assets.

Lloyds also said it will have to sell more than 600 branches in four years, representing a 4.6% current account market share and about 19% of its mortgage balances, to satisfy the European Union over competition concerns related to the government aid the bank received last year.

It plans to sell the Cheltenham & Gloucester branch network, along with C&G savings and certain mortgages, Lloyds TSB Scotland, additional TSB branches in England and Wales and the Internet banking unit Intelligent Finance.

Lloyds and government officials have said they expect good demand for the assets.

The government hopes new market entrants will snap up the assets, increasing competition in the sector.

In the prospectus, however, Lloyds warned that "there is no assurance that the price that the group receives for any assets sold pursuant to the restructuring plan will be at a level the group considers adequate or which it could obtain in circumstances in which the group was not required to sell such assets … "

Analysts seemed divided on the level of interest for the assets Lloyds and Royal Bank of Scotland Group PLC are selling.

Like its peer, the 70%-government-owned RBS is also being told by the EU to divest from some businesses within four years, including branches in Scotland, England and Wales, and the accounts of some small- and midsize-business customers across the U.K. "There will be plenty of potential buyers with new entrants such as foreign banks, start-ups and private-equity firms joining existing players," said Neil Tomlinson, head of retail banking consulting at Deloitte.

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