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 360.

    Been with Lloyds for over 25yrs. Ive never had a problem or cause to complain. Never had an error on a statement. Most people who complain have not worked within their banking agreement and have had penalties to pay which they dont like - thats tough.
    I dont want to move to teh Co-Op as I want to put my money where I want to NOT where I'm told to.

  • rate this
    0

    Comment number 359.

    I'm only in my 20s but I've already had terrible experiences with two other banks before finally being satisfied with the Co-op when I switched 4yrs ago. I love their ethical stance, and I love being treated as a member and an individual when I visit their branches, rather than just another person to make money out of. No hard sell in branch, and lovely staff on the phone and in branch!

  • rate this
    +1

    Comment number 358.

    What is it going to cost me to be transferred from a bank that I have used for 40 years?
    No respect for customer loyalty.
    Why should I have to pay for this either in my time or money?

  • rate this
    0

    Comment number 357.

    If you want to know if your branch is effected - you can search the map here: http://www.theitd.com/about/the-itblog/map-of-lloyds-tsb-branch-sell-off-in-less-than-10-minutes.html

  • rate this
    +1

    Comment number 356.

    I have been a Coop Bank customer for over 50 years.

    I hope that it will stay faithfull to its principles and not get tainted by the big bank 'get rich quick' ideas of Lloyds.

  • rate this
    0

    Comment number 355.

    I thought that the European Commision were concerned about customer choice when making their ruling that Lloyds sell off branches.
    Yet there will be no remaining Lloyds TSB branches in Scotland and this customer will have his business transferred to the Coop. Where is my customer choice in all of this?

  • rate this
    0

    Comment number 354.

    I'm just wondering why Lloyds think they can sell me and the Co-op think can buy me as a customer? I didn't realise that banks had now gone into the market of selling customers. I'll be voting with my feet, I certainly don't recall signing up to be sold for a profit (or my account at least).

  • rate this
    +2

    Comment number 353.

    With a greater high street presence, The Co-operative Bank could ultimately become the largest UK high street bank. Lots of people seem to indicate that they would switch to the Co-op if there was a local branch. Well soon there will be.

  • rate this
    +2

    Comment number 352.

    This is excellent news for customers old and new. Co-op is by far the most ethical of the banks. If you doubt what I am saying read their Ethical Operating Plan on the Co-operative Group website, The customer always comes first, I have been a Co-op bank customer for over 25 years and have always recieved brilliant service.

  • rate this
    -2

    Comment number 351.

    As Lloyds is owned by the uk taxpayer by 41%, do we get a say and/or payout ? thoughts please!!!

  • rate this
    +2

    Comment number 350.

    I have been with the The Co-operative Bank for many years having been with other banks beforehand. The Co-operative Bank is, by far, the very best bank I have ever been with and they have moral standards that are way ahead of the other banks. I hope that the other banks will ultimately become more like the Co-operative Bank and not the other way round.

  • rate this
    0

    Comment number 349.

    And for all the pro and anti comments here , the majority of people will do precisely nothing, just like for all the furore over other banks behaviour, bailouts and misdemeanours the vast majority have done nothing and will do nothing. 75% of people in this country have never changed their bank even when it has been bought, taken over or merged just like this demerger.

  • rate this
    0

    Comment number 348.

    Seems like North Wales will be left out of the deal. Shame, being a Co-op customer and the nearest branch being about 80miles away

  • rate this
    -4

    Comment number 347.

    Been a Lloyds TSB satisfied customer for many years,will not be coming a customer of Co-op,I like to bank with a bank,not a grocer.

  • rate this
    +2

    Comment number 346.

    I joined the Liverpool Branch of the Co-operative Bank on 14 June 1974 and have never regretted it. While the savings rates have been pretty variable ( their Fixed Term rates are up with the best now ) the customer service, particularly telephone, has always been very good.
    Other bank a/c's may come & go but not the Co-op who will always be my main bank.

  • rate this
    +1

    Comment number 345.

    well, i'm hoping my investment in £100 of TSB shares at 30pence each start to rise and hopefully co-op will give the banking giants a run for there money

  • rate this
    +1

    Comment number 344.

    I currently bank with a Lloyds subsidary and have seen a drastic deteriation in service since LLoyds took control. I will be delighted to transfer to the CO-OP. Like other comments, I am fed up with the greed based banks today.

  • rate this
    +2

    Comment number 343.

    This is good news for once, coop seems to support alot of ethical standards. As poster no 9 says: We should vote with our choices! Choose better companies to bank with! These politics don't do anything for our benefit so lets vote with our money and bank with ethical banks!

  • rate this
    +1

    Comment number 342.

    I think even an idiot would think the price the CO-OP is paying well below market price the same as Virgin who bought Northern Rock the tax payer is loosing out current a/c can easily be transferred back but mortgages is not so easy people with mortgages should be given the choice

  • rate this
    +2

    Comment number 341.

    Yeah. well...erm...

    Competition eh...kinda I guess..

    Switching banks is hard work...as mentioned on R4, one way of improving choice would be for your bank account number to stay with you, irrespective of who you get shafted by..

    It would help with the erm..customer focus...

 

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