The future of internet bank Intelligent Finance (IF) has been placed in doubt after the brand was dropped from a deal with the Co-operative.
It is understood Lloyds may be forced to run the IF business down to appease European Union rules on state aid in a move that would mark the end of the 12-year-old brand.
IF was due to be offloaded alongside the 632 branches as part of the divestment requirements by the EU, but was not included in the final Co-op deal.
In a statement to IF customers, Lloyds said: "Following detailed discussions with The Co-operative Group, our Intelligent Finance business will no longer be included in the transfer of part of our business.
"This is because it did not fit with the Co-operative's strategic requirements."
Customers and staff are being told it is business as usual for IF until further notice.
But the news leaves a question mark over the future of what was once hailed as the pioneer of online banking. IF hoped to change the world of banking when it launched in the autumn of 2000, as an early enthusiast of offset mortgages.
It has since been somewhat sidelined after first pulling out of selling direct mortgages in 2007 and then exiting mortgages altogether two years later, under a Lloyds restructure.
The Edinburgh-headquartered group has since offered savings products only, but rarely appears in the best buy tables as it has been pushed out by building societies keen to attract savers with attractive rates.
Price comparison firm Moneyfacts said while it did not always have the top introductory rates, IF still had some good deals. "Intelligent Finance may not have a marketing leading account, however they do offer a relatively decent rate on their ISA of 2.50% that is just shy of the top paying Cash ISAs and it doesn't include an introductory bonus to keep track of, unlike many of the best buy ISAs," according to Moneyfacts.
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