The Co-operative Group has withdrawn from the process currently being run by Lloyds Banking Group for the disposal of branch assets – known as Verde.
This move follows the decision by the Co-operative Group and the Co-operative Bank plc boards that it was not in the best interests of the group’s members to proceed further at this time.
In a statement, the group said the the decision reflects the impact of the current economic environment, the worsened outlook for economic growth and the increasing regulatory requirements on the financial services sector in general.
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Peter Marks, group chief executive of The Co-operative Group, said: “After detailed and thorough consideration of all aspects of the Verde transaction, we have decided, at this time, that it is not in the best interests of our members to proceed with the transaction.
“Having worked closely and constructively with Lloyds we are naturally disappointed to have reached this conclusion. However, against the backdrop of the current economic environment, the worsened outlook for economic growth and the increasing regulatory requirements on the financial services sector in general, the Verde transaction would not currently deliver a suitable return for our members within a reasonable timeframe and with an acceptable level of risk.
“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. 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 with our strong, established brand and our reputation as a trusted financial services business.”
The BBC’s economics editor, Robert Peston, told Radio 4’s Today programme that the Co-op could pull out of banking all together.