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Lloyds Banking Group The Co-operative The Co-operative Bank

The Co-operative Group to grow its banking arm to nearly 1,000 high street branches as it takes over Lloyds Verde business

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By The Drum Team, Editorial

July 19, 2012 | 3 min read

The Co-operative Group is set to become a challenger brand within the banking sector having agreed a deal to acquire 632 branches of Lloyds Banking Group.

The £750m deal to acquire the Verde business from Lloyds will see the Co-operative group grow its banking arm to almost 1,000 UK high street stores, which it claims will create the greatest shake-up of the banking sector in a generation.

The transaction is set to be completed before November 2013, following the recommendation from the Independent Commissions on Banking that the creation of a challenger bank with around seven per cent marketing share of personal current accounts be created.

The formation of the network is expected to represent nearly 10 per cent of the UK bank network, and reach 11 million customers.

Terms of the deal will see an initial £350 million payment made, followed by an addition of £400 million in earn-out payments, while Paul Pester, chief executive of Verde, will become chief executive of the combine banking business it has been proposed.

Peter Marks, group chief executive of The Co-operative Group, said: "We're delighted to be announcing that we have reached agreement in principle with Lloyds Banking Group on the terms of this important and transformational transaction. This deal would deliver the biggest shake-up in high street banking in a generation. Consequently, we believe this would be a great deal for customers, for the public, for UK banking generally and for The Co-operative Group, in particular.

"It would be a great deal for customers because it would make the services of our member-owned, customer-led, ethically-driven, bank available to millions of people we've not been able to serve up until now.

"It would be a great deal for the taxpayer because as well as receiving a fair price up front, the deal would also mean they would share in the profits of the enlarged bank for years to come.

"So far as UK banking generally is concerned, this would be a great deal because it would help restore trust in a sector whose image has been badly tarnished over recent years.

"And finally, it would be a great deal for The Co-operative Group, its 20 million customers, its seven million customer-owners and its 100,000 staff, because it would propel us into the premier league of UK banking.

"The acquisition of the Verde business would significantly advance our growth strategy, creating a combined bank approaching 7% market share of UK personal current account customers. That would allow us to really challenge the status quo on the high street.

"Despite the crisis in the financial sector, our bank has continued to go from strength to strength, coming through the financial crisis in great shape and maintaining our ethical and socially responsible credentials. Whilst we are not at the end of the road yet, we are pleased to have reached this important milestone and look forward to continuing to work with Lloyds Banking Group to reach a final agreement."

Lloyds Banking Group The Co-operative The Co-operative Bank

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