Co-op closes in on 632 Lloyds branches
THE Co-operative Group has taken a major step towards buying 632 branches from Lloyds Banking Group after being named preferred bidder.
Lloyds is being forced to sell the branches to comply with EU rules after it received a £20bn bail-out from the government at the height of the financial crisis.
Last week Co-op chief executive Peter Marks spoke of his ambitions to buy the branches and create a “challenger bank”, bringing fresh competition to the market place.
Lloyds will now enter into exclusive discussions with the Co-op, which beat off competition in the auction from NBNK Investments, a takeover vehicle run by former Northern Rock boss Gary Hoffman.
The bids by the Co-op and NBNK are thought to have been in the region of £1.5 billion, but the Co-op was seen as slight favourite because it already runs a sizeable bank.
It acquired Britannia in 2009 and currently has 343 branches and 6.5 million customers, including in current accounts, mortgages and credit cards.
Co-op chief executive Peter Marks said: “We think a combination of these branches and our own would significantly strengthen our position as a real challenger in relationship banking in the UK.”
He said a deal was not a certainty, adding: “Clearly our bid for the assets is non-binding and we would only proceed if we could reach an agreement that was in the interests of our members and other stakeholders.
“At the same time, acquisition is not the only route we have for growing this business. Our bank has continued to go from strength to strength following the merger with Britannia and we are pushing further through initiatives such as our in-store banking programme.
“We are, however, pleased to have been granted preferred bidder status and look forward to working with Lloyds to try to reach agreement.”
Lloyds said: “Lloyds Banking Group will now progress more detailed exclusive discussions with The Co-operative Group, with the aim of agreeing heads of terms by the end of Q1 2012.
“The group will continue to progress an Initial Public Offering (IPO) during this phase of the discussions.”
