banking crisis

On the basis of the scale of Lloyds as one of the banks with the highest number of retail outlets and the loss of the COOP a rural friendly organisation, I wonder if this story means fewer local bank branches in rural service centres over time? It tells us:

George Osborne’s hopes of injecting fresh competition into high street banking were dashed on Wednesday after the Co-operative Group pulled out of talks to buy 632 branches from Lloyds Banking Group.

After more than a year of discussions, the biggest mutual in the country walked away from a deal that would have created a 974-strong branch network – three times the current size of the Co-op bank – and increased its share of current accounts from 2% to 7%.

It is a damaging blow the Co-op, which had boasted it would become a major challenger in high street banking. The Manchester-based group immediately faced speculation, strongly denied, that it would abandon its 150 years of banking altogether.

The branches – which Lloyds had been selling under the codename Verde – must be spun off by November under instruction from Europe as a consequence of Lloyds’ £20bn taxpayer bailoutin 2008. A flotation under the TSB banner, a brand which disappeared from high street after Lloyds took over the bank in the 1990s, is now expected early next year. However, the 632 branches will be rebranded with a new blue TSB logo on the high street from September.

Only two months ago the chancellor had heralded the Co-op deal as helping to create “upstart challengers offering new and better services that shake up the established players”. The Treasury had worked hard behind the scenes to try to smooth a transaction that was intended to give the Co-op an extra 4.8 million customers as a ready-made rival to take on the “big four” of Lloyds, Royal Bank of Scotland, HSBC and Barclays, although there was repeated speculation that City regulators had presented raised questions about the tie-up.