Lloyds TSB logo (left) and a computer generated image of TSB under the Co-op’s ownership.
The New Way of Banking? Co-op Buys 632 Lloyds Branches
Stephen: Late last year we took all our money – the little we had – and our ‘business’ account and moved it out of one of the big banks (the world’s most profitable banks are here in Australia!). We joined a co-op, where we are also now shareholders, as are all the members.
While this below, regarding the purchase of the big UK bank, Lloyds, is not NESARA – nor is it the future, where we will need no money whatsoever – it is a prelude to the new, equipollent way the banks will soon be operating.
The bank’s new owners, The Co-operative, will form the Trustee Saving Bank. Just as the current ways of banking are exposed, and their owners are reformed or removed, I expect it will live up to its name.
Co-op Pledges Shakeup of High Street Banking After Lloyds Deal
Co-operative secures cut-price deal to take over 632 Lloyds branches in sale ordered after breach of EU rules on state aid
By Jill Treanor, City Editor, The Guardian – July 19, 2012
The Co-operative has pledged to shake up the closed shop of high-street banking after clinching a cut-price deal to take control of 632 Lloyds Banking Group branches in a move that will triple its branch network and bring back the centuries-old TSB brand.
Some 4.8 million Lloyds customers will transfer to the Co-op along with up to 7,000 staff who currently work in the branches that are to be sold. The deal is expected to give the Co-op some muscle in high-street banking.
It will create a 974-strong branch network with a 7% share of current accounts – propelling it to become a major competitor to the big four high-street lenders, Lloyds, Barclays, HSBC and Royal Bank of Scotland. The Co-op currently has just 2% of accounts.
The branches changing hands, however, will not operate under the Co-op banner, but will be rebranded as TSB – the name of the Trustee Saving Bank, the one-time mutual taken over by Lloyds in the 1990s – by next autumn.
Unions welcomed the certainty for staff after months of on-off negotiations – although the deal could yet be halted by regulators.
Analysts said the branches had changed hands at a rock-bottom price, equal to just £553,000 each.
Lloyds, 40% owned by the taxpayer since the financial crisis, was forced to lower its sights to push through the deal after months of delays. This could result in a loss of up to £1.2bn for the bailed-out bank, which is also providing sweeteners to help the Co-op pay for the branches. The sale was ordered by the EU because the £20bn taxpayer bailout of Lloyds breached EU rules on state aid.
Peter Marks, chief executive of the sprawling Co-op group, which also includes supermarkets, pharmacies and a funeral business, said: “People have lost trust in the financial services sector. Now we can provide a big bank, a challenger bank, that people can really trust.”
At a time of scandals involving the traditional players – Barclays over the Libor inter-bank interest rate, HSBC over money laundering and RBS over disruption caused by a serious computer breakdown – Marks said in the past six weeks there had been a 60% increase in customers “banging on our doors, wanting to join us”.
Kevin Mountford, head of banking at financial website MoneySupermarket, said that a new challenger bank might be the “antidote” the banking sector needed during the current reputational crisis. “It may encourage a culture of switching [bank accounts], which has been lacking over the past few years, especially as the Co-operative Bank is seen as a more trusted brand,” said Mountford on Thursday.
The management for the enlarged bank will be provided by Lloyds, which is also providing finance for the Co-op to complete the deal.
The chancellor, George Osborne, said: “The sale of hundreds of Lloyds branches to the Co-operative creates a new challenger bank and promotes mutuals.” The government is hopeful that the big four banks will face more competition from Virgin, which has bought Northern Rock, and from Marks & Spencer, which this week launched a current account.
The City minister, Mark Hoban, worked behind the scenes to facilitate the deal between Lloyds and the Co-op, holding as many as 30 meetings including discussions with the EU, which is yet to approve the deal.
The Financial Services Authority, which has had concerns about the deal and is understood to be calling for the Co-op board to be bolstered, also needs to approve it. Last night the rating agency Fitch downgraded the Co-op and warned that another downgrade could come because of the risks attached to the bank’s rapid growth.
Labour, which gets some of its funding from the Co-operative movement, welcomed the transaction but repeated its call for more branches to be spun out of the existing high-street players.
Under fire for the price achieved, Lloyds insisted the deal was the best available, preferable to a flotation of the branches or a sale to NBNK, a bid vehicle run by the former Northern Rock boss Gary Hoffman who was said to have been ready to pay more than twice the price agreed with the Co-op.
The Co-op will pay just £350m initially through an issue of bonds which will be underwritten by Lloyds in a highly unusual move. Another £400m could be handed over by 2027, depending on the performance of the enlarged group, while Lloyds is also providing £1.5bn of capital for the branches.
Marks, who warned in March that a deal might not be done, admitted it could take years for the branches to be completely separated from Lloyds and would give no timetable for when the TSB branches would be rebranded as part of the Co-op.
Lloyds is to provide the computer systems for the branches being sold, resolving a key concern for the Financial Services Authority, particularly since the computer meltdown at RBS. The bailed-out bank will continue to get a share of the business, which will be rebranded to TSB during summer 2013. The actual split of the business may not take place until November – the deadline set by the EU.
Peter Marks – Co-op through and through
Only four months ago the chief executive of the Co-operative Group, Peter Marks, was concerned that the Lloyds deal might not happen. A deal now looks likely, provided regulators can be convinced, that will shift the mutual from grocery and funeral care in to banking and put the blunt-talking Bradford City football fan at the centre of the government’s plans to bolster competition on the high street.
It has been a life’s work. Marks started working for the Co-op at 17 – he is now 62. He stands astride the country’s biggest convenience store chain, largest farming group and a major high street travel agency. But the Rolling Stones fan, who plays drums in a local band, may find banking his toughest challenge yet.
During rounds of interviews on Thursday, Marks was often left searching for detailed answers often expected of bankers in the midst of takeover deals. But the Lloyds deal brings with it new management, notably Paul Pester, who will run the enlarged bank. An ex-competitive swimmer and keen sportsman, Pester will be the one who will soon need all the answers at his finger tips.