The Royal Bank of Scotland (RBS) and Lloyds Banking Group are looking towards entering the private sector again soon and could be forced to sell off more branches than are already up for sale
Chancellor George Osborne has instructed the Office of Fair Trading to consider "what more can be done" and to see if a bigger branch disposal programme could boost competition in the small business banking sector.
RBS and Lloyds must sell 316 and 632 branches respectively under the terms of the bailouts received for both banks during 2008 and 2009.
A deal between RBS and Santander fell through in 2012, while an agreement between Lloyds and the Co-operative Bank also collapsed earlier this year.
Lloyds is now looking to turn its branches into new TSB branded ones and will move affected customers to the new bank.
The sell-offs are supposed to be finished by the end of 2013 but a delay is now likely.
By Asim Shah