chief executive of the Co-operative Group has admitted its planned takeover of 632 Lloyds branches could collapse, but launched a fierce defence of the mutual’s ability to run a bank.
Peter Marks said the Co-op will decide in “weeks rather than months” whether to go ahead with the £1bn-£1.5bn deal but declined to say if its preferred bidder status was subject to a timetable.
Marks also said he had a chief executive for the financial services arm “waiting in the wings”, having failed in an audacious attempt to poach Gary Hoffman, the head of bank buyout vehicle NBNK, earlier this year.
The Co-op is facing pressure from the Financial Services Authority, which is believed to want reassurances that the expanded bank – which would be Britain’s seventh-largest – would have enough capital, sufficient board experience and adequate systems to cope.
Marks rejected claims that there were concerns over the Co-op’s corporate governance or funding model, saying “we know how to run a bank” but admitted the group has still to convince the FSA.
“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.”
Later Marks took to the airwaves to contrast the record of the Co-op with its banking rivals, telling the BBC: “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.”
He was speaking as the Co-op group, which spans food, pharmacies, travel and funeral care, posted a 5.8 per cent fall in pre-tax profits to £373m for 2011. Sales rose one per cent to £13.3bn.
New bank venture NBNK, run by former Northern Rock chief executive Gary Hoffman, is expected to return to Lloyds with a sweetened offer for the branches if the Co-op deal falls apart.
European regulators have ordered Lloyds to sell the branches as part of the company’s state bailout in 2008, which left Britain with a 41 per cent stake in Lloyds after it pumped around £20bn into the bank.