The Financial Times reports that the planned sale of more than 600 Lloyds bank branches to the Co-operative Group has collapsed after the Co-op concluded it could not proceed with the transaction.
The details behind the Co-op’s decision at a board meeting on Tuesday to pull the plug on the deal are unclear. However, the Financial Times reported in February that the bank was facing a capital hole of up to £1bn, equivalent to half its capital, further undermining an already shaky deal.
During the last six years the Co-op has expanded rapidly, first with the acquisition of Somerfield, a retail chain, for £1.6bn in 2008 and then through a merger with Britannia building society the following year.
Some Co-op bank employees will be relieved. Concerns have been privately voiced about these measures, because Britannia systems had not yet been assimilated.
Concerned co-operators question the judgment of the Co-operative Group in this venture, in relationship to their Chinese chemical manufacturing project and the Thomas Cook merger.