The Co-operative Group said it would make a second-round bid for the 630 branches being sold by Lloyds Banking Group, bringing some relief to the part-nationalised bank that this week lost its CEO and faces renewed market turmoil.

We have a clear strategy for driving The Co-operative Group forwards. As part of this we remain interested in the Lloyds Banking Group's branch assets as we believe this would support our moves to grow our relationship banking business in the UK, said Chief Executive Peter Marks in a statement on Friday after markets closed.

European regulators ordered Lloyds to shed the branches as a condition for approving its bail-out with taxpayers' money during the banking credit crisis.

So far, only one other institution, new British bank venture NBNK, has submitted a second-round bid -- which sources with knowledge of the matter have said could be worth 1.5 billion pounds.

The departure of Lloyds chief executive Antonio Horta-Osario on sick leave on Wednesday may complicate the sale, although a source involved in the sale process said the main problem is that bidders are not prepared to pay the full book value for the assets.

Entrepreneur Hugh Osmond's Sun Capital is also in talks to buy the branches, but has concerns over the cost, a source told Reuters last month.

The auction offers a chance to create Britain's seventh-biggest bank in one fell swoop with the sale including 4.6 percent of personal current accounts and 5 percent of the mortgage market, contributing about 500 million pounds of pretax profit in 2008 and income of about 1.4 billion pounds.

The Co-op, Britain's largest mutual owned by almost 6 million people, has expanded its presence in financial services since merging with the Britannia Building Society over two years ago.

The group is also the country's fifth largest food retailer.

Lloyds, 40 percent owned by the British government since the 2008 credit crisis, is also considering floating the bank branches as an alternative to a sale.

(Reporting by Rosalba O'Brien; Additional reporting by Lorraine Turner and Sudip Kar-Gupta;Editing by Greg Mahlich)