Prospective Lloyds' Co-op deal falls through at late stage
25th April 2013 | News
The planned acquisition of Lloyds Banking Group’s 631 UK bank branches by the Co-op group has fallen through.
The group cited continued economic uncertainty and a tougher regulatory environment as reasons for the collapsed deal.
It was hoped the purchase of all 631 Lloyds branches would elevate the Co-op as a major competitor to the existing high street banks. Business Secretary, Vince Cable has also voiced his disappointment at the collapse of a deal that would have brought increased competition for lenders:
"I think it is very disappointing. I was really hoping this [the deal] would happen," said Cable.
"We do need more competition and we need more diversity in business lending, and having the Co-op, a mutual, a new player in the small business lending, would have been a big step forward."
The sale of the Lloyds branches, known within the industry as 'Project Verde', was demanded by European regulators as the price for being bailed out by the UK government during the recession.
Peter Marks, chief executive of The Co-op, confirmed that the move fell through as it was not in the best interests of its members.
He said: "Against the backdrop of the current economic environment, the worsened outlook for economic growth and the increasing regulatory requirements on the financial services sector in general, the Verde transaction would not currently deliver a suitable return for our members within a reasonable timeframe and with an acceptable level of risk."
Lloyds, which is currently 39 per cent-owned by the Government, had a deadline of November 2013 in which to complete the sale of its branches, in order to comply with European Commission competition rules.
However, the collapse of the deal means their proposed flotation will unlikely be possible until the second half of 2014, with the Government and Lloyds likely to ask Brussels for an extension to the deadline in order to find an alternative buyer.
Image: wwphotos (flickr)