THE Co-op yesterday said that its talks with Lloyds Bank over the purchase of 630 branches were going according to plan, though sources said it might strengthen its board in order to satisfy regulators.
The mutual, which is in exclusive talks with Lloyds, said last night: “As part of a thorough due diligence process we are working together with the Financial Services Authority and Lloyds on a range of issues, as you would expect on a deal of this significance. We are making good progress.”
Lloyds has been ordered by the European competition authorities to sell the branches to a third party by 2013. Reports suggest that the FSA, which normally deals with companies whose boards consist of people with considerable banking expertise, wants to be satisfied that the Co-op, the UK’s biggest mutual, has similar expertise.
If the deal goes ahead, the Co-op will become 40 per cent focused on financial services.
Lloyds and the Co-op are hoping that they will be able to sign off the deal within the next few weeks, although it is possible there could be last-minute issues that could throw the whole deal wide open again.
“The structure of the Co-op, being a mutual organisation, is very different from what the FSA is used to,” said a source. “So there will be a certain amount of wanting to get comfortable with the governance structure and there will be a certain amount of strengthening. But the FSA is not ordering anything to happen.”