Seven branches of Lloyds TSB and Cheltenham and Gloucester across the county are to be sold to the Co-operative Bank.

Customers and staff will be transferred with the branch, but customers will have the option to move back to Lloyds.

The High Street bank, which is 40% owned by the taxpayer, was ordered by the European Commission to sell part of its business as a way of increasing competition and customer choice in the UK banking sector.

Lloyds TSB is selling 632 branches to the Co-operative Bank for an initial payment of £350m, followed by a further £400m based on performance. Many of the branches are in Scotland.

Nearly five million Lloyds TSB customers will have their accounts moved. The Co-op will gain around 7% of the market.

The Kent branches scheduled for transfer include all the Cheltenham and Gloucester outlets - in Ashford, Canterbury, Gillingham, Maidstone and Tunbridge Wells. Lloyds TSB branches involved are at 208-210 High Street, Chatham, and Sheerness High Street.

Lloyds TSB told customers: "You don’t need to do anything differently as there will be no changes for some time. We will keep you up to date at every stage and you can carry on banking just as you do now. We will write to customers who are directly affected by the transfer to let you know what the changes mean."

Which? said it was "a welcome first step to bringing more competition to the high street which is vital for improving the quality and range of banking services available to consumers".

Alex Jackman, of The Forum of Private Business, said: "This could be a really significant development for small firms looking to restore traditional relationship banking, where the tick box lending criteria approach will hopefully have no place.

"Co-op is already a respected High Street name with great ethical standards and credentials most other banks can only dream of. If this deal goes through it could genuinely be a fresh new era for high street lending for SMEs - something we have long been calling for. Co-op are big on fair trade, so let’s hope that shines through in their retail banking arm when it comes to small business lending."