On Friday, after months of speculation as to who might be willing to buy over 600 LloydsTSB branches, and with banks from all corners of the world listed as possible interested parties, the Co-operative Group finally agreed a “non-binding“ heads of terms with LloydsTSB to pay over €800m for these branches. In layman’s terms this means that an agreement in principle has been reached for the Co-operative and Lloyds to go to the next stages of their deal relationship, and whilst the transaction will still require further due diligence by the Co-operative’s advisors, as well as approval both from its board and the EU, FSA and HM Treasury, at least both parties are now dancing to the same tune.
The deal would take the Co-operative Group to nearly 1,000 branches and significantly enhance its presence on the UK high street. The group - via its Co-operative Financial Services arm - increased its banking presence back in 2010 by acquiring Britannia Building Society, with an agreed desire to provide a “trusted” and ethical financial services business.
UK banks have been unpopular for a long period of time now, what with the nationalisation of Northern Rock, LloydsTSB and RBS back in 2008, and despite their best attempts to keep a lower profile, have failed miserably with uproar over bankers’ pay and, in the last couple of weeks, the emergence of the Libor rate-fixing scandal.
The Co-operative Group however has always promoted ethical policies, whether that be in relation to farming and its stance on food ethics, or in its approach to banking. As far back as 1992 the Co-operative bank launched its Ethical Policy allowing customers to have their say, and subsequently withholding funding to business operating in activities that customers deem to be unethical.
If the deal proceeds, it will not only open up more choice for consumers, who are now weary of learning about repeated bad behaviour by their banks, but also hopefully encourage some banks to take a long hard look at their own activities.