THE CO-OPERATIVE Group yesterday insisted it is still committed to the banking business, after pulling out of negotiations to buy 623 branches from bailed-out bank Lloyds.
The deal for the so-called Verde unit would have given the Co-op a seven per cent market share, enabling it to challenge the biggest banks.
But now it has dropped back and pledged to continue to follow a more organic growth model.
“The Verde transaction offered a significant opportunity to the Co-operative and the sector as a whole as it would have created a major challenger bank. It was right therefore, for us to explore it in the detailed way we have,” said the group’s chief executive Peter Marks.
“We were, however, clear from the outset that Verde was a complex transaction and that this was not the only option open to us to develop our bank. We remain committed to driving the Co-operative Group forwards under our clear strategy and, as part of that, we will continue to develop our bank for the long-term, offering a real alternative on the high street.”
However, Marks is leaving the group next month and will be replaced by Euan Sutherland, former chief operating officer at Kingfisher.
He is expected to take a few months to bed in before making any decisions on the future of the banking arm.
Meanwhile Lloyds’ shares increased 1.7 per cent on the day as investors considered the Co-op sale a bad deal for the bank.
But as the quality of the loan book and customers is as yet not public, analysts are cautious on whether or not Lloyds can get a better price.