Never mind milk. How do you work out a fair price for a bank?
Peter Marks could hardly contain himself today, The Co-op’s chief executive talking with the glee of a shopper who’s just found a widescreen TV with the wrong price tag, before scampering off to the tills before the error gets put right.
“This deal would deliver the biggest shake-up in high street banking in a generation,” he beamed, after The Co-op said it had reached an agreement to buy 632 branches owned by Lloyds Banking Group.
“We believe this would be a great deal for customers, for the public, for UK banking generally and for The Co-operative Group, in particular.”
That last bit was telling. The Co-op is paying just £350m up front for the branches. A further £400m is due… over the next fifteen years. And that’s dependent on performance. In the current climate, there’s no guarantee of Lloyds seeing all of the cash.
“It would be a great deal for the taxpayer,” Marks insisted, “because as well as receiving a fair price up front, they would share in the profits of the enlarged bank for years to come.”
Either way, the deal sees assets worth around £24bn transfer to The Co-op’s financial services arm, along with 4.8 million banking customers, including 3.1 million current accounts.
Paul Pester, who handled the deal for Lloyds, will take over as the new boss of The Co-op Bank, controlling almost 10% of the high street banking market.
Lloyds boss Antonio Horta-Osorio, who was over a barrel regarding the Brussels-mandated sale, said The Co-op would be a “a good owner for our business, customers and colleagues”.
The mutual might pride itself on its ethical stance, but it showed today it can drive a pretty hard bargain.
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