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Co-op buys 632 Lloyds branches in bank shake-up
The sale means the Co-op will have nearly 1,000 branches and 11 million customers, making it a real challenger on the high street.
Lloyds has agreed to sell 632 of its branches to the Co-operative group for £750 million.
Co-op will pay £350 million upfront and a further £400 million depending on the bank’s performance between now and 2027.
The move means Co-op bank, which is owned by its members, will have nearly 1,000 branches, making it a real challenger on the high street. It will acquire 4.8 million Lloyds customers, including some Cheltenham and Gloucester customers, bringing its total customer base to some 11 million – 10% of today’s market.
The deal is expected to be completed before the end of November 2013, but is subject to the approval by the Financial Services Authority (FSA), HM Treasury and the European Commission.
The branches will be rebranded as TSB next summer, and once the sale is completed the changeover to the Co-op systems will begin in 2015.
Lloyds (LLOY.L) was ordered to shed 632 of its branches by the European Commission after the group bought HBOS during the financial crisis and subsequently needed a bailout from the government in 2008. The bank remains 40% owned by the taxpayer.
Dubbed project Verde, Lloyds had originally hoped to get up to £1.5 billion for the sale of its branches, but the valuation has suffered as a result of the economic slowdown.
Peter Marks, chief executive of the Co-operative Group, said the deal would deliver ‘the biggest shake-up in high street banking in a generation’ and is a ‘great deal’ for customers, taxpayers and UK banking generally.
‘Despite the crisis in the financial sector, our bank has continued to go from strength to strength, coming through the financial crisis in great shape and maintaining our ethical and socially responsible credentials,’ he said, criticising the mess other banks had got into with their investment banking business model.
‘The acquisition of the Verde business would significantly advance our growth strategy, creating a combined bank approaching 7% market share of UK personal current account customers.’
Co-op added that on the back of the Barclays Libor scandal and RBS IT disaster it has already seen a 54% increase in the number of people requesting to switch to their current account in the last four weeks.
Marks, meanwhile, said that because the Co-operative Group is owned by its members it will continue to maintain its ethical selling point.
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