The Co-operative Group is set to hold a crunch meeting this week amid concerns it may pull out of a £1.5bn deal to acquire 632 Lloyds branches.
According to The Sunday Telegraph, the meeting will include an update from the mutual’s chief executive Peter Marks about the progress of talks with Lloyds and the FSA.
Co-op won the battle to acquire Lloyds “Project Verde” business last year. In March, Lloyds gave Co-op a further three months of exclusivity talks in which to conclude the deal.
The Co-op meeting is likely to include an update on FSA demands a structure is put in place which ensures the entire Co-op business falls under the regulator’s scope and not its banking arm alone.
The Sunday Telegraph reports that a source close to Co-op also said the FSA has made it clear its concerns are focused on the complex structure of the group and may call for the Co-op to hold an additional £3bn of capital at group level. The paper reports the regulator is also believed to have said that for the deal is to continue the chief executive of the Co-op would need considerable experience of banking, something Marks does not have.
Last week, NBNK re-entered the race for the 632 Lloyds branches. The offer from NBNK would see shareholders given the choice of cash or shares in what it describes would be “the UK’s only major, listed organisation solely dedicated to retail and SME banking”.