Lloyds sell 600 branches to Co-op

Lloyds Bank, 40% owned by the Goverment, has agreed to offload 632 branches to the Co-op in what looks like an impressive deal for the Co-op, owned by its customers but not so good for the owners of Lloyds, many of whom are UK taxpayers.

Under the terms of the deal, these branches will be wrapped up under the TSB brand for a sale price of £300 million, with a possible distant future payment of £400 million, performance related and it also comes with a capital injection of £1.5 billion from Lloyds.

The Co-op may be considered dull and boring by comparison with some of it's banking colleagues but the Government is prepared to sell substantially below price, to see a large part of the Lloyds network in the hands of a company that is solid, trustworthy and does not have ambitions to trade exotic and complex financial products that few people can understand.

The market initial view is that the sale price is far too cheap but the aim here is more to take the banking industry back to a better place than to get the Government's stake out of Lloyds at a break even.