Co-op snaps up 632 Lloyds branches
The Co-operative Group is to acquire 632 branches of Lloyds Banking Group, taking with it around 4.8 million customers.
The larger bank, which will become The Co-operative Banking Group, has paid Lloyds around £250 million upfront for the takeover, and will pay up to an additional £400 million based on performance of the new group.
The acquisition from the 40% state-owned bank will give Co-op around 7% of the UK's personal current accounts, and its customer base will soar to 11 million.
The sale means the Co-op will own around 1,000 branches on the UK high street. The deal is expected to complete at the end of next year.
Peter Marks, group chief executive of The Co-operative Group, says the deal represents the "biggest shake-up in high street banking in a generation".
"So far as UK banking generally is concerned, this would be a great deal because it would help restore trust in a sector whose image has been badly tarnished over recent years," he says.
Kevin Mountford, head of banking at MoneySupermarket, says the takeover heralds a "significant shift" in the UK banking sector.
He adds: "As we have seen over recent weeks following the recent banking turmoil, many smaller banks, including The Co-operative Bank, have benefited from customers switching away from the big banks.
"Creating a new 'real' challenger to the big banks may be the antidote the sector needs, and may encourage a culture of switching which has been lacking over the past few years, especially as The Co-operative Bank is seen as a more trusted brand that many of its rivals."
The Co-operative Bank has benefited from an increased number of customers switching to the ethical bank in recent weeks, due to crumbling trust in the bigger banking groups.
Over the past two weeks the bank has seen a jump of 43% in business customers wanting to transfer their current account, as well as a significant uplift in customers transferring their personal current account to the Co-op.
This article was written for our sister website Money Observer
An account opened with a clearing bank (few building societies offer current accounts) that provides the ability to draw cash (usually via a debit card) or cheques from the account. Some pay fairly minimal rates of interest if the account is in credit. Most current accounts insist your monthly income (salary or pension) is paid directly in each month and they offer a number of optional services – such as overdrafts and charge cards – which are negotiable but will incur fees.