Co-op back in the frame to do deal with Lloyds

Friday 29th June 2012

The Co-operative Group has re-entered exclusive discussions with Lloyds about buying 600 branches.

It means that rival bidder NBNK now has little hope of clinching the deal.

The Co-op was originally chosen as the preferred bidder in December, but the deal, originally due to conclude in March, hit problems.

There were reports that the FSA had ordered the Co-op to beef up its board as it geared up to become a larger banking business, but chief executive Peter Marks insisted the delays were down to the Co-op carrying out due diligence on the assets, and reportedly the Co-op and Lloyds have been negotiating a reduced price.

Analysts estimate the price has dropped from around £2bn to between £1.1–1.5bn.

The deal is subject to approval by both sets of boards, the FSA, EU and Treasury.

The Co-op statement confirming it had re-entered exclusivity says there is ‘no certainty’ that a deal will be done.

Separately, the Co-op has announced that James Hillon, head of mortgages at the Co-operative Bank, is also to head up Platform, the intermediary arm. The announcement follows the bank’s decision to run all its mortgage activity as one business.

Lee Gladwell has been heading up Platform on an interim basis, following the departure of David Tweedy, and an announcement on Gladwell’s role will be issued at the end of August, following the transition period.

Hillon said: “The Co-operative Bank is committed to lending to the intermediary mortgage market via Platform.

“We believe that by bringing our mortgage operations together, our customers will have access to increasingly competitive products and rates, with extremely high levels of service.

“Platform has always been a champion of intermediaries and professional advice, and this will continue to be the case.  

“We will continue to work closely with brokers to listen to their views and develop products that their customers want.”