Britain's state-rescued Lloyds Banking Group on Wednesday said a deal agreed last year to sell 632 branches at a loss to The Co-operative Group had collapsed, adding that it would now divest Project Verde via an initial public offering.

LONDON (Reuters) - J Sainsbury delivered the strongest growth among Britain's so-called Big Four grocers in the 12 weeks to April 14 and was the only one to increase market share, monthly industry data showed on Tuesday. Market researcher Kantar Worldpanel said sales at Sainsbury, Britain's third-largest grocer, grew 5.4 percent in the period, increasing its market share to 16.9 percent.

LONDON (Reuters) - The finance ministry should examine the advantages and disadvantages of breaking up state-backed lenders RBS and Lloyds and hiving off their toxic assets into a 'bad bank', senior MPs have demanded. The cross-party Treasury Select Committee, responsible for examining the finance ministry's policies, recommended it deliver a cost-benefit analysis in time for the government's spending review in June. The report should also look at the impact on competition, it said.

By Matt Scuffham LONDON (Reuters) - British bank Lloyds has hired advisers for the possible sale of its Scottish Widows asset management arm, as it prepares for a likely regulatory demand to raise more capital, sources said. UK banks are having to consider further disposals after the Bank of England said they must raise a total of 25 billion pounds of extra capital by the end of the year, to be in a position to absorb future loan losses.