It was going to be a hard-fought auction. The chance to buy a fully-formed network of bank branches, complete (one supposes) with all the trimmings, rather than just a property portfolio of variable quality, does not come along often. This week, the informal deadline for the sale of 632 Lloyds Banking Group branches passed. Had the parcel been under the hammer at Christies, the auctioneer would have had to buy the lot in.

There is just one bid, miles away from the £2 billion that Lloyds indicated it had in mind, and even that bidder is pretty picky about what he’ll take. He’d rather pass on some of the mortgages, for example, presumably because he doesn’t share Lloyds’ optimism that they will be repaid. “He” in this context is Lord (Peter) Levene, the man who is credited with saving another Lloyd’s, the eponymous insurance market. His special purpose vehicle, NBNK, has indicated that it might pay £1.5 billion for the £36 billion of deposits and pick-of-litter mortgage assets.

Understandably, Lloyds is underwhelmed by this offer, and has extended the deadline, in the despeate hope that Richard Branson, Hugh Osmond or the Co-Op will come riding to the rescue, saddlebags bulging with cash. The brutal truth is that nobody wants to put proper risk capital into banks these days, because of the widespread suspicion that they need vast amounts more of it. NBNK’s assets add up to just £38m, and it would need to find takers for all sorts of funny money instruments to scrape together £1.5 billion. Meanwhile, the 2013 deadline ticks ever nearer.

Quite why Lloyds ever thought it could stuff anyone with this lot at anything other than a fire sale price is something of a mystery. The solution is as obvious today as it was when the European Commission ordered the disposal. Lloyds will have to break off enough of its business to comply, and fortunately it has a ready-made brand in the shape of the Halifax. For the vast bulk of customers, the credit crunch, forced merger and subsequent banking crisis will have passed them by. Despite the best efforts of its various owners, Halifax is still a valuable and trusted brand, capable of providing real competition to the banking cartel. Lloyds’ new bosses should forget a sale, and give the business to the bank’s shareholders. One day, Halifax Bank might even become attractive enough for the state to find buyers for its 41% holding.