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Co-op keeps faith in Lloyds deal

The renowned British retail chain remain hopeful that they can reinvigorate negotiations with the London Bank
 Co-op keeps faith in Lloyds deal
 
 

Co-operative Group Chief Executive, Peter Marks has been quick to refute claims that his company will struggle as head of the high-esteemed national bank.

The prospective takeover of 632 Lloyds branches in the UK was thought to be making good progress, but following stalls in recent weeks, Marks has been forced to reiterate the Co-op’s determination to carry through with the £1bn-£1.5bn deal.

If a completion of the deal does occur, he expects it to be done in weeks rather than months. The uncertainty surrounding the talks has led to a slightly more reserved statement this week, however.

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“I cannot predict right now whether we will get to the end on this. There are a number of regulatory and economic issues that we have to be clear about, before we make a transaction,” Marks explained.

Despite the complications, the Co-op has maintained the stance that they could do a worthy job if a deal is completed.

“We have been running a bank for over 100 years. It is an ethical bank with social responsibility at its core. It is also commercially successful. During the 2008 financial crisis, when the major banks were collapsing ... we sailed serenely through,” Marks told the BBC this week.

This defense is in direct response to concerns issued by the Financial Services Authority, regarding the experience, systems and capital applicable to the venture.

2011’s figures possibly suggest why the FSA has asked for reassurances. Despite a one percent rise in sales to £13.3bn, the Co-op posted an overall fall in pre-tax profits of 5.8 percent to £373m.

A lack of competition is likely to work in their favour however, with only one real challenging bid in the offing.

This could come from new banking venture, NBNK who are run by former Northern Rock Chief Executive, Gary Hoffman.

As long as they can convince the FSA that they have the infrastructure to resurrect a deal though, Peter Marks’s company still remain in the driving seat and will hope April sees more progress with negotiations than March has produced.

Lloyds were told they had to sell the branches as a consequence of of 2008’s company state bailout.

British taxpayers currently own 41 percent of the company following the £20bn injection into the bank four years ago.

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