The Co-operative Bank has emerged as the preferred buyer of over 600 branches from Lloyds Banking Group.
The move will triple the Co-op’s current size from 300 branches and is expected to boost competition between high street banks.
Co-operative Bank branch acquisition
The Co-operative Bank has been named by Lloyds as the preferred bidder for over 620 branches, having already increased its high street presence significantly following the take over of Britannia Building Society. It is the top-scoring high street bank for customer satisfaction and is a Which? recommended provider for current accounts.
Co-op Group chief executive, Peter Marks said: ‘We have a clear strategy for driving The Co-operative Group forwards. As part of that we have been working to build upon our strong foundations in banking to ensure customers have a real alternative on the high street. We are a people’s bank – mutually owned, with profits shared between members and also used to invest for the long-term. 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.’
Lloyds Banking Group sell-off
Lloyds Banking Group is selling over 600 branches in response to an EU directive on state aid received by banks. Lloyds received funding from the government during the banking crisis of 2008 and its merger with Halifax Bank of Scotland in 2009. The resulting group has around 3,000 branches. Among the premises to be transferred are 160 Cheltenham & Gloucester branches, acquired by Lloyds in 1997.
The emergence of the Co-op as a significant challenger to bigger high street banks was welcomed by Which? chief executive, Peter Vicary-Smith, who said: ‘If people are to get a better deal from their banks we need greater competition, which means an effective challenger on the high street. People tell us they like the Co-operative Bank and we think they can teach the other banks a lesson in good customer service.
‘However, even after the branch sale, Lloyds will still be left with a dominant position in major retail banking markets and is likely to use its market power to increase prices for consumers. If Lloyds will not agree to enhance the size of its divestment, then an early reference to the Competition Commission may be the only way of securing further improvements.’