THE Co-operative Group is set to continue its search for a chief executive to run the 630 branches put up for sale by Lloyds after an audacious approach to the head of a rival bidder came to nothing.
The mutual held talks with Gary Hoffman, chief executive of new British bank venture NBNK, earlier this year as it is tries to satisfy the City regulator that it has the expertise required for a massive expansion.
The Co-op is the preferred bidder for Lloyds’ branch sale, which is known as Project Verde, and is expected to raise £1.5bn for the taxpayer-funded bank.
The Co-op’s headhunter, Whitehead Mann, approached Hoffman earlier this year but he informed them he wanted to stay with NBNK, the buy-out vehicle set up by Lord Levene.
It is thought the Co-op did not get as far as formally offering a position to Hoffman and sources said the nature of the role of chief executive of the Co-op Bank will not be known until a deal with Lloyds has been confirmed.
The Co-op has still to convince the Financial Services Authority (FSA) it has the ability to run the branches.
A deal would treble the Co-op’s banking arm from about 340 branches to nearly 1,000 but the FSA wants to see more financial services expertise at group level.
The Co-op group is expected to revamp its board, which is made up of members rather than company executives and non-executive directors, to meet the concerns of the FSA.
The banking division of the Co-op, which bought Britannia Building Society in 2009, is currently run by acting chief executive Barry Tootell and chairman Paul Flowers, a Methodist minister and Bradford city councillor.
A spokesman for the Co-op said: “We are making good progress in our search for a chief executive for the Co-operative Bank, with a strong list of candidates. We will update as and when appropriate.”
Lloyds, which is being forced to sell the branches under European state aid rules, chose the Co-op over NBNK as the preferred bidder in December. The decision came a month after NBNK lost out to Sir Richard Branson’s Virgin in the bidding for the “good” part of Northern Rock.
Hoffman joined NBNK as chief executive in May last year after a stint running nationalised bank Northern Rock. Yesterday NBNK declined to comment.
Lloyds is due to update the market on Verde at the end of this month.