I’m delighted to announce that following approval from both the Bank and Group Boards, The Co-operative Group has reached agreement (known as the heads of terms) with Lloyds Banking Group (LBG) regarding the sale of its ‘Verde’ business.
The heads of terms are non-binding, but represent the first step on the path to a fully binding legal sale and purchase agreement, which is subject to successful completion of due diligence processes, as well as Board and regulatory approvals.
This would deliver the biggest shake-up in high street banking in a generation, creating a new and alternative force in the marketplace. The combined bank would encompass a total of 11m customers and a network of almost 1,000 branches, with a market share approaching 7% of today’s UK personal current accounts.
The issue of trust in the banking sector has never been more important and the need for a customer-centric, member-led, ethically-driven alternative has never been greater. The Co-operative Banking Group is that alternative.
The acquisition of the Verde business is a fantastic opportunity for our Group, colleagues, customers and members, because it would significantly advance our growth strategy, propelling us into the premier league of banking. This is an important and transformational transaction and a huge step forward on our journey to become the compelling co-operative alternative to the ‘Big Five’ banks.
LBG will use TSB as the banking brand for the ‘Verde’ business from summer 2013 which would operate separately for a period of time, ahead of integration with the existing Co-operative Banking Group business.
Subject to FSA approval, Paul Pester, currently Chief Executive of Verde, would become Chief Executive of the combined banking business.
Barry Tootell who has done a fantastic job over the last 12 months in leading the Bank, will continue to lead the business until such time as the new management structure is put in place. Barry will then take up a senior executive management position, working with Paul, to drive the business forward.
The combined bank would ultimately operate on a separated version of the existing proven LBG IT platform, which would be run for us by LBG on a managed service basis, under commercial market terms. The earliest point at which we would expect to start migration of our existing banking business onto our version of the LBG IT platform would be 2015.
As we continue to make good progress and work through our final negotiations, there will no doubt be further external comment and speculation as you would expect with a transaction of this scale. As has been the case until now, much of this will be inaccurate and unhelpful and I would advise colleagues to continue to focus on the important job of serving our customers and members in a highly professional way.
My thanks to everyone for your patience, hard work and commitment in helping us reach this significant milestone.
IVA completed with StepChange.
Last payment Sept 2016 CC Oct 2016
