Co-operative Group will pay Lloyds up to £750m for the sale of the 632 Project Verde branches.
Lloyds and Co-operative agreed commercial terms in June, entering exclusive talks on the sale of the branches.
An announcement to the London Stock Exchange this morning states Co-operative will pay an initial £350m for the Project Verde business and up to £400m based on the performance of Co-operative’s combined banking business until 2027.
The initial £350m will be funded by the sale of Co-operative perpetual subordinated debt underwritten by the group. The deal is expected to be completed by the end of November 2013.
Co-operative will hold an additional £1.5bn equity capital to take on the Verde business. Verde has almost five million customers and represents 6 per cent of all bank branches in the UK and around £11bn risk weighted assets.
The deal also sees Co-operative take on the TSB and Cheltenham & Gloucester brands. The Verde branches will be rebranded to TSB from summer 2013.
Lloyds group chief executive Antonio Horta-Osorio (pictured) says: “We believe the Co-operative Group will be a good owner for our business, customers and colleagues, and the combined banking business will be a significant competitor on the high street with nearly 10 per cent of today’s UK branch network.”