Beazley Chair Holt Leads Race For TSB Post

A former Lloyds TSB (LSE: LLOY.L - news) executive is a frontrunner to take the helm of one of Britain's biggest retail banks when it lists on the stock market in 2014.

Sky News understands that Dennis Holt, who was on the main board of Lloyds between 2000 and 2001, has emerged as a leading candidate to become chairman of TSB (KOSDAQ: 045340.KQ - news) 's network of more than 630 branches.

TSB is being separated from Lloyds Banking Group - in which UK taxpayers hold a 39% stake - under European state aid rules, and is expected to be floated as a public company following the collapse of a controversial deal to sell the network to the Co-Operative Group.

Mr Holt, whose roles at Lloyds TSB included running its insurance arm and its retail banking operations, went on to run the UK division of Axa (Paris: FR0000120628 - news) , the French insurance giant. Since retiring as a full-time executive, he has taken a number of boardroom roles, including the chairmanship of Beazley (Other OTC: BEAZF - news) , the specialist insurer.

His appointment as chairman of TSB is not yet a foregone conclusion, and he remains in discussions with Lloyds' board about the move. A number of other candidates also remain in the frame for the post, insiders said on Monday.

If it is confirmed, Mr Holt's appointment would resolve one of the important challenges facing Lloyds as it prepares to float TSB on the stock market. The size of the network, which would rank it in the ten biggest retail banks in Britain, would be likely to catapult the company straight into the FTSE-250 index.

Originally set a deadline of the end of this year to complete the disposal of the branches, Lloyds has appealed to Brussels for more time to offload TSB, which it has codenamed Project Verde.

The collapse of the Co-Op deal caused embarrassment within the mutual, at Lloyds and at the Treasury, where George Osborne, the Chancellor, had enthusiastically backed a transaction.

The mutual had beaten off competition from NBNK Investments, a specialist buyout vehicle, to be selected as the preferred buyer of the branches. In recent months, Lord Levene, the former chairman of NBNK, has waged a public campaign against Lloyds' board over the decision not to pursue his offer.

Paul Pester, chief executive of the Verde network, was lined up to run the Co-Op's banking arm as part of their agreement and is now likely to stay on as the boss of the quoted TSB business.

Lloyds declined to comment on the appointment of a chairman of TSB, which could be announced as soon as next week.