April 24 - The planned sale of 630 UK bank branches by Lloyds Banking Group to the Co-Operative Group has fallen through, leaving state-backed Lloyds to pursue a flotation of the business. As Hayley Platt reports the decision reflects a lack confidence in the UK's financial industry.
It was a deal which would have made the Co-op Britain's seventh-biggest bank. But after a year of talks to buy 630 UK branches of Lloyds banking Group it's pulling out. The Co-op says Britain's economic outlook is just too poor and the new regulatory requirements too tough. Chris Leslie is an opposition MP. SOUNDBITE: Chris Leslie, Finance Secretary, Labour Party, saying (English): "The Co-op bank have said the worries that they've had about this whole thing is because there's not enough growth prospects for the future and so again all of these issues come back to whether our economy is on the right trajectory and whether we're heading in the right direction." European Regulators ordered the sell off after Lloyds was bailed out by the tax payer. The part-nationalised bank will now pursue a stock market flotation says IG's Alistair McCaig. SOUNDBITE: Alistair McCaig, market analyst, IG, saying (English): "They've been looking to asset strip, like so many banks and the high street at the moment is a relatively unpopular place. It's not like they can even look over to other areas or sectors of the retail markets to sell these on to so I think Lloyds have got a real problem on their hands." Barclays also has a problem. It missed its profit target by a quarter thanks to restructuring costs. SOUNDBITE: Alistair McCaig, market analyst, IG, saying (English): "When you change from a Bob Diamond bank to an Anthony Jenkins bank there's always going to be quite a few teething issues and this was never going to happen over night. So very much the high street friendly mentality that Anthony Jenkins is trying to bring to Barclays is going to take time to put in place." Barclays investment banking division did beat expectations in the first quarter sending its shares to a 6-week high. But while investors may be focussing on that side of the business many customers still remember rate-rigging, boardroom excesses and mis-selling scandals. They - like the Co-op - don't yet seem convinced the UK financial industry is on the way back up.