Co-op to buy 632 Lloyds bank branches

 

Peter Marks: "We are focused on making sure that we are a great home for Lloyds customers"

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The Co-operative Group has agreed terms to buy 632 branches from Lloyds Banking Group in a deal that could create a new force in UK High Street banking.

About 4.8 million Lloyds customers will be transferred to the Co-op, giving it about 7% of the current account market.

The Co-op will pay £350m upfront and up to an additional £400m based on the performance of the combined business.

The sale was demanded by European regulators after Lloyds was part-nationalised in 2009.

After buying HBOS at the height of the financial crisis in 2008, Lloyds then needed a government bailout, and is still 40%-owned by the taxpayer.

'Fair price'

The deal with the Co-op will take the Co-op's total branches to almost 1,000.

The price tag, of up to £750m, is much less than the £1.5bn that had originally been expected for the sale.

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It is hard to think of any deal in which the seller has provided quite so much help to the buyer”

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"Those were the numbers that were speculated 12 months ago but during the last 12 months the business that we're buying has changed significantly, [and] we think we're paying a very fair price," Co-op chief executive Peter Marks told the BBC.

Under the deal, Lloyds is also providing £1.5bn of capital for the branches, meaning it faces a loss of about £750m on the sale.

BBC business editor Robert Peston said it looked like "an amazingly good deal" for the Co-op.

The sale, which is still subject to approval by the Financial Services Authority, is expected to be completed by the end of November 2013.

The Chancellor, George Osborne, welcomed the deal.

"This is another step towards creating a new banking system for Britain that gives real choice to customers and supports the economy," he said.

"The sale of hundreds of Lloyds branches to the Co-operative creates a new challenger bank and promotes mutuals. This follows the sale of Northern Rock to Virgin Money in January and represents another important step towards a more competitive banking sector."

'Bring back trust'

Lloyds group chief executive Antonio Horta-Osorio said: "In agreeing to move ahead with the Co-operative we provide greater certainty for our customers and for our shareholders.

"In addition to an upfront consideration, we will also get to share in the future financial performance of the combined banking business which will be an effective challenger with a strong customer focus."

Paul Lewis, Moneybox, explains how the Co-op deal affects Lloyds customers

Lloyds said that the branches being sold would be rebranded to TSB next summer and would transfer to the Co-op under that brand.

They include all Cheltenham & Gloucester branches, and all Lloyds TSB branches in Scotland.

Co-op chief Peter Marks said the deal was good news for the industry.

"What the banking industry needs is to bring back trust. We've seen over the last few years, and particularly over the last few weeks, trust has deteriorated in big banks," he said.

"This represents a major change to the face of retail banking in the UK."

He added that the Co-op, which is owned by its members, was a very different bank to the main High Street banks.

 

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  • rate this
    0

    Comment number 160.

    I hope the £750m Lloyds are receiving will be contributed towards repaying the £21bn bail-out they received from us tax-payers.

  • rate this
    +2

    Comment number 159.

    This sounds like a good move, and the Co-op does have a good reputation for ethical selling etc. But they are getting into a very different ball game here. They (and their customers) will need to ensure the culture doesn't change too.

    I remember when little RBS were seen as 'the good guys' when they bought over big, bad Nat West.

  • rate this
    +1

    Comment number 158.

    I might be confused about this (I'm no expert on economics) but surely if Lloyds is making a loss of £750m on the sale, and the government owns 40% of Lloyds... isn't the taxpayer making a huge loss while the Co-op reaps the rewards? I was under the impression that when we part-nationalised the major banks the plan was that we would start making our money back, not losing even more of it

  • rate this
    -3

    Comment number 157.

    Blame the banks? I blame Gordon and his deliberate policy of light regulation. UK became the centre of world finance and therefore key to the whole global crisis. Banks realised they could exploit the gullible public and get away with it, GB stood back and gloated over the economic growth they produced – until the Bust! Yes Labour is still to blame for the mess we’re in today

  • rate this
    0

    Comment number 156.

    Have banked with Lloyds for 30+ years. Was refused an equity release mortgage (less than 1/3rd the value of the House) but was told I failed "to meet their criteriea" Despite two requests Lloydsr wouldn't say why I failed. Oddly enough HSBC also refused but wouldn't say. Financial affairs always kept in 100% order and never involved in Money Laundering. Guess that's where I was going wrong.

  • Comment number 155.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 154.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    0

    Comment number 153.

    "135.Rocketman

    @ 124: Being "ethical" is so subjective though. It depends on the views of who's at the top making the choices, no?"

    No, that's the point - the top has to listen to the members/customers, it's being *truly* customer focused, rather than the bankers 'squeeze every last penny out regardless' version.

    --
    At least finance/profit can be quantified!"

    So can murders.

  • rate this
    0

    Comment number 152.

    Terrible deal for Lloyds share holders,Eric Daniels must be rubbing his grubby hands together whilst counting his pension income and pay offs after leading a previously well run bank into the mire.
    One must question the team that negotiated this deal i would think the price barely covers the freehold or leases value on the branches they are selling.

  • rate this
    +4

    Comment number 151.

    I haven't stepped into a bank branch for over 20 years and I have no intention of doing so for the next twenty.

    Smile - it's the Co-operative Bank.

  • rate this
    0

    Comment number 150.

    It looks like a pretty complicated piece of organisation. I hope it goes well but if Lloyds is shifting TSB along with systems and customers, there's a lot to go wrong, so it behoves all Co-op customers old and new (who are the shareholder, sort of) keep watch on how the Co-op prepares for this. It isn't a bank that's ever had complex reorganisations to contend with.

  • rate this
    0

    Comment number 149.

    I hope the co-op treat their living customers better than their dead customers
    Channel 4' Dispatches co-op funerals, 23 June 2012.

  • rate this
    +2

    Comment number 148.

    145. Stephen Harvie
    Yet another example that Thatcher's culture of greed made a few individuals obscenely rich and that ordinary people with honesty and integrity end up having to sort out the mess
    +++
    I probably benefited financially from Thatchers policies but I'm definitely in deficit in the morality stakes.

  • rate this
    +2

    Comment number 147.

    "The price tag, of up to £750m, is much less than the £1.5bn that had originally been expected for the sale."

    "Under the deal, Lloyds is also providing £1.5bn of capital for the branches, meaning it faces a loss of about £750m on the sale."

    So in other words Lloyds is giving Co-op £750m. Wouldn't this incur a massive tax bill? It's hard to change the habits of banks.

  • rate this
    +19

    Comment number 146.

    A good move for Banking and the UK.

    I only hope the Co-op stay a true "retail" bank and isn't lured into making money through "investment" banking by the silky tongued Lloyds boys.

    Not that I have anything against investment banking, but I do think alot of people in the UK just want to be with a Bank that has real values, has it's customers at heart, and provides SIMPLE services that are WANTED.

  • rate this
    +6

    Comment number 145.

    Yet another example that Thatcher's culture of greed made a few individuals obscenely rich and that ordinary people with honesty and integrity end up having to sort out the mess

  • rate this
    +1

    Comment number 144.

    I don't think they're involved in the sale, but my local (village) branch of Lloyds has always given excellent service. They were especially helpful when my wife died, no fees or charges.

  • rate this
    +2

    Comment number 143.

    so let me get this right. The taxpayer who funded the bailout of TSB is again losing hundreds of millions of £ on a sale, in the same way that the Taxpayer lost hundreds of millions on the sale of Northern Rock? yes it's a great deal for Co-op at the expense of the taxpayer yet again. The taxpayer paid for the building of the olympic village, which was then sold to private companies at a loss too

  • rate this
    -7

    Comment number 142.

    Kent C Strait. The fact I didn't get my way has nothing to do with it, the high handed manner in which we were dealt with IS unprofessional and unethical. Before you decide this is about party politics, treating people like vermin is about common courtesy and decency, something neither you nor the Co-op know anything about

  • Comment number 141.

    This comment was removed because the moderators found it broke the house rules. Explain.

 

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