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.

The takeover will take the Co-op's total branches to almost 1,000.

'Fair price'

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.

The price tag is much less than the £1.5bn reported to have been bid for the branches last year by NBNK, which was formed to build a new High Street banking presence.

"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.

The deal, 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."

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.





BBC News - Co-op to buy 632 Lloyds bank branches

gota give this a "cautious" welcome

All Banks are the same, they are there to make money. End of !!

Originally Posted by D 8 RCS

All Banks are the same, they are there to make money. End of !!

whom they are making it for, marks them out.

Originally Posted by Firemouth

whom they are making it for, marks them out.

Yes, the Fund Managers, the Directors, the Branch Managers and the list goes on.
Do you honestly believe that the profits go to the Savers ? If it did they would be getting far higher returns than any of the other Banks and everybody would bank with them.
I am not saying they are a bad bank, just that they are run in much the same way as all the others.

err, profits do go to savers, as they are members.

but, in all honesty, no. that's why i said "cautious". only time will tell.

It's an old link, but this is pretty much the way that the Co-op Bank operates.

Co-op passes up £4m to maintain ethics | Business | The Guardian