Co-op Calls Off Deal With Lloyds

Just when Lloyds Banking Group thought they would finally square away payback for their state-funded bailout in 2008, the Co-operative Group has come down with a case of cold feet, withdrawing its previous agreement to buy Lloyd’s ‘Verde’ network.

The Co-operative Group announced that the deal was off on Wednesday, and they were no longer buying the 632 branches from Lloyds: a blow for both the UK government and Lloyds, reports The Guardian.

A Co-op representative explained the decision to The Guardian, and stated, “This decision reflects the impact of the current economic environment, the worsened outlook for economic growth and the increasing regulatory requirements on the financial services sector in general.”

The government was in favor of adding new competition to the nation’s four leading high street banks: Lloyds, Royal Bank of Scotland, HSBC, and Barclays. If the deal had gone through, the network could have increased current accounts by 7 percent and expanded to at least 974 branches—tripling Co-ops current size. The back out came as a disappointment for the government, who are aiming to balance out the unhealthy control of the four big banks.

“This is not only bad news for the chancellor but for customers, too,” said Chris Leslie, financial secretary ito the UK Treasury, to The Guardian.

Ultimately, consumers will suffer from a lack high street choices and the small competition will continue to feed power to the bigger banks.

Since the European Union funded Lloyd’s bailout back in 2008, it was expected that part of Lloyd’s payback plan would include selling a network of 632 branches and 754 ATMs. The branches were being sold under the cover name, ‘Verde’.

As a result of the deal break, Lloyds must now rely on a contingency plan, which forces the branches to go on the stock market through an initial public offering (IPO) branded by Lloyds’ old name, TSB.

According to The Guardian article, Lloyds stated, “There are no direct impacts to customers as a result of today’s announcements. Customers do not need to do anything and can carry on banking in the same way as they do now, accessing their accounts as usual via the branch, telephone and online banking.”

To read the full story at The Guardian click here.