UK bank Lloyds TSB has confirmed that it plans a European internet venture, but refuses to say whether it will provide online banking, share dealing or other services.

According to a report in the Financial Times newspaper, Lloyds TSB wants to launch a pan-European internet bank, first targeting Spain before moving into Italy later in the year.

However the bank, which is the UK's fourth-largest, is reluctant to confirm any details.

Spokeswoman Joanna Charlton told BBC News Online that the bank was developing a "European internet offering" and was currently "testing the concept and the systems".

She declined to give a date for the launch or confirm which markets the company wanted to target.

The bank wanted to get the details right before making its plans public, she said.

Europe beckons

The introduction of Europe's single currency has created a prime market that many UK and US banks are keen to exploit.

Lloyds TSB for one is now pondering how best to do that. The bank, result of a 1995 merger of Lloyds Bank and the former TSB building society, finds itself under pressure to expand or seek larger partners to stay in competition with rivals like HSBC, Barclays and NatWest.

The company earns just 20% from foreign business - mainly in New Zealand and Latin America. In recent years it has tried to broaden its base by acquiring mortgage lender Cheltenham and Gloucester, and life insurers Abbey Life and Scottish Widows.

Internet plans

Mrs Charlton insists that Lloyds TSB is not late in jumping on the internet band wagon: "We are way ahead of other banks".

All personal banking customers and some business customers of Lloyds TSB can already use the internet to take care of their money.

More importantly, there are plans to develop a separate 'stand-alone' online bank, which would have its own branding and allow the bank to target technology-savvy customers.

If the plans for the UK come to fruition, Lloyds TSB would follow the example set by Prudential's Egg, HSBC's First Direct and Co-op's Smile.

More mysterious, though, is what exactly Lloyds TSB has in mind for its new pan-European venture - and how it plans to take on the banking giants of Germany, France, the Netherlands and Spain.

Some competitors are already out of the starting blocks. First-e, for example, is an internet bank based in Dublin, owned by a French company and offering its services in the UK and Germany.