Scottish high street banking could be revolutionised with regulators from the European Union set to force Lloyds to sell its 185 branches north of the border.

However, the deal is likely to allow the company to retain its Bank of Scotland branches having bought parent company HBOS last year, The Scotsman reports.

EU regulators led by competition commissioner Neelie Kroes have forced a number of other European banks to sell of parts of their businesses after the wave of mergers during the global financial crisis.

Virgin Money and Tesco Bank are thought to be some of the main contenders to fill the vacuum left by Lloyds.

As well as potentially benefiting consumers, giving a new bank a foothold in Scotland could provide a boost for banking graduate schemes.

Earlier this week, Lloyds Banking Group announced that it is seeking additional funding as an alternative to the state-sponsored Government Asset Protection Scheme (GAPS).

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