Tuesday round-up: Lloyds bid, SFO probe, downgrade fears...

National Australia Bank is in talks with NBNK, the challenger bank run by former Northern Rock's former chief executive Gary Hoffman, over a merger of its UK operations as part of a bid for the 632 branches being sold by Lloyds Banking Group, plus other news...

NBNK, which was co-founded by Lord Levene, the chairman of Lloyd's of London, is discussing the takeover of NAB-owned Clydesdale Bank and Yorkshire Bank in a deal that will kick-start the formation of a new banking group that could challenge Britain's largest lenders. MORE...

The Serious Fraud Office is examining potentially fraudulent trades of asset-backed securities carried out by banks in Britain in the run-up to the financial crisis. MORE...

Banks threatened with a downgrade by Moody's have launched a rearguard action, arguing that the ratings agency should balance a reduction in government support with improvements already made on capital and liquidity. MORE (from the Times; may require subscription)...