Co-op’s bid for Lloyds would create "credible" bank, says Marks

CO-OPERATIVE Group chief executive Peter Marks has said that the Co-op’s bid for the 632 bank branches which Lloyds has been forced to dispose of by the European Union could create a “highly credible alternative High St bank”.

Mr Marks said: “Its very early days. What I can say is that if we felt this was a good deal for us then this would be a very important strategic acquisition for our business”.

“Our Co-operative status would bring into high st a compelling and competitive offer which is different to the plc banking model at a time when trust is one of the big issues for consumers.”

Mr Marks, however, went on to rule out a bid for the Iceland business, although he said it would be interested in acquiring some of the stores if they became available.

“We have a target to open 200 stores and we will get there by lots of different routes,” he said.

Mr Marks also expanded on his statement that the trading conditions faced by the Co-operative’s food business were among the worst he had experienced during a 40-year career in retail.

He said that although economists may argue that the the UK is not in recession, consumers have been spending as if it were since 2008 due to concerns about their own financial position as house prices decline, inflation eats away at disposable income and insecurity surrounds employment prospects.

He added that the main difference between the current period of economic turmoil and the recessions of the 1980s and 1990s was “the length of time it is taking to recover”.

Moreover, he argued that this was the first downturn he had experienced where food sales had begun to decline.

He said that food retailers were being forced into higher levels of promotional activity, where typical levels of discounting of around 25% have increased to around 40%. During Christmas last year, discounting levels hit 50%.

Mr Marks also revealed that the business had been impacted by the riots, with more than 200 stores closing for a period as a result of disturbances or on the advice of the Police.

He said that five stores remained closed due to severe damage, including one at Garston in south Liverpool, and that several members of staff had been hospitalised.

When asked about the cost of the disturbances to the Group, Mr Marks said: “We would estimate that it would be around £10m as we speak, but that is going up all the time.”