Can the Co-op be a new force for good?
Lloyds has agreed to sell the mutual 632 of its branches. Will it help turn the bank into a serious rival?
The once-tiny Co-operative Bank is set to have nearly 1,000 branches when the £350m, rising to £750m, agreement to buy a large swathe of Lloyds Banking Group's network completes next year.
The deal to buy 632 branches, which has yet to be approved by the City regulator, the Treasury and the European Commission, will give the Co-op a huge high street presence, catapulting it into being a "challenger" to the traditional big names of Barclays, HSBC, Lloyds, NatWest and Santander.
In fact, the battering the big names have taken in recent weeks, after the RBS/NatWest computer cock-up and Barclays' Libor scandal, has seen a 60 per cent increase in the number of people switching to the Co-op.
"People have been taking a personal stand against bank scandals and moving their money to local, ethical or mutual financial institutions that they feel they can trust," pointed out Liberal Democrat MP Susan Kramer.
"The Co-op, and other local, ethical or mutual banks, have a vital role to play in making our banking sector more diverse. This deal will help throw open the retail-banking market, give a boost to mutual banking and help the industry move back to responsible banking that benefits the wider economy."
People are attracted to the Co-op by its ethical credentials. But can it maintain its reputation after it triples the size of its branch network? Will it be able to manage control of 7 per cent of the current account market, bearing in mind that it has a relatively paltry 2 per cent now?
Last year, the Independent Commission on Banking said that any one bank hoping to challenge the existing "elite" has to have a strong enough presence in the market to provide a real alternative.
It said then that the only real challenger brand in the UK was the Nationwide building society.
But once the Lloyds deal goes through, the Co-op will have the sixth-largest bank branch network in the country. In Scotland, it will become the third-largest bank in terms of branch network.
But will the growth mean leaving behind its beliefs? No, says the Co-op. It was quick to reinforce its ethical commitments this week, a policy that ensures it never invests in nor does business with unethical companies. Specifically, it refuses to do business with arms manufacturers, those with poor labour records, and companies which develop high climate change emissions fuel.
Sarah Brooks, director of financial services at Consumer Focus, said: "The Co-operative Bank must use its new status to provide a real alternative to other banks with a focus on straightforward products and excellent customer service. Co-op must offer a point of difference and not just more of the same offered by the big five banks."
Co-op boss Peter Marks said: "We believe that this deal will help restore trust in a sector whose image has been badly tarnished over recent years and would allow us to genuinely challenge the status quo on the high street."
Kevin Mountford, head of banking at MoneySupermarket, approved.
"Hopefully, it will be the antidote the sector needs and encourage a culture of switching as the needs of the customer, and not the shareholders, come to the fore," he said.
The 4 million or so Lloyds customers who will be switched to the Co-op may not be so happy, especially if they are asked to leave behind a decent, low-rate mortgage deal.
Compare with the Independent: See how much you could save by switching credit cards. Compare now
educationTo mark International Women's Day, Sarah Brown on how charities have brought proper joined-up thinking to the delivery of education
- 1 The future of sex: The first female condoms were derided, mistrusted and shunned - but will their modern counterparts catch on?
- 2 South African rhino finally put down after roaming Kruger park for days with horn hacked off and bullet in brain
- 3 Sir Patrick Stewart patches into David Cameron and Barack Obama's Ukraine talks with packet of wet wipes
- 4 Study suggests that 'gaydars' are real - at least for women
- 5 Man stabbed with Legend of Zelda Master Sword in serious condition
Apple's Tim Cook: Business isn’t just about making profit
Thousands of young people forced to go without food after benefits wrongly stopped under 'draconian' new sanctions regime
Ukraine crisis: New navy chief 'defects' and surrenders Crimean HQ as Putin claims ultranationalists forced intervention
Ukraine crisis: Russia dismisses '3am ultimatum' as 'total nonsense'
If you're horrified by a flame-roasted dog, you should be shocked at a hog roast
Britain's top vet sparks controversy with call for ban on slashing animals' throats in 'ritual' slaughters for halal and kosher meat products
iJobs Money & Business
£32000 - £36000 per annum + generous benefits: Pro-Recruitment Group: * TAX * ...
£37000 - £40000 per annum + £20000 benefits package: Pro-Recruitment Group: **...
£30000 - £35000 per annum + generous benefits: Pro-Recruitment Group: Mixed Ta...
£30000 - £40000 per annum + benefits: Pro-Recruitment Group: Personal Tax, FTS...
Day In a Page
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony
A charming four-bedroom Oxfordshire cottage with oak floors and chunky-beamed ceilings, £465,000
A beautiful one-bed flat in a sought-after portered block, with access to Norland Square communal gardens
A one-bedroom flat within a Sixties school conversion with high-spec design and open-plan kitchen, close to Lambeth North Tube, £435,000
A 17th century four-bedroom house, with open fireplaces, cellar and pool, £600,000
A three-bedroom, coach house with luxury open-plan living space and contemporary breakfast bar
A newly refurbished one-bedroom flat in the heart of Mayfair, close to Grosvenor Square
A charming four-bedroom house overlooking Burleigh Square Park, close to Thorpe Bay
A three-bedroom farmhouse with a large inglenook fireplace and exposed beams
A boutique mews house, set around a central courtyard, with three bedrooms and a private roof terrace
A four-bedroom farm-conversion with three bathrooms and two reception rooms
A two-bedroom detached house with ensuite bathrooms and a sun-drenched decked terrace, £750,000
A modern and spacious two-bedroom, penthouse flat with two bathrooms in a prestigious development
A beautifully renovated five-bedroom terrace with three reception rooms and a courtyard garden, £700,000
A four-bedroom period house which has been extended to provide almost 2,500sq ft of living space, £675,000
A pretty three-bedroom Georgian home with a 22ft drawing room and a master suite with a balcony, £525,000
A substanstial family home with five bedrooms and landscaped gardens in the much sought-after Branksome Park area
A well-presented three-bedroom house with front and rear gardens, close to White City station, £475,000
A handsome five-bedroom house in a sought-after location close to the city centre
A five-bedroom country home with valley views, equestrian stables and 27 acres of land, £725,000
A six-bedroom farm house with separate, detached cottages and 371 acres of land
A two-bedroom cottage with parquet floors, chunky beams and an open fireplace
A three-bedrrom flat with 2,733sq feet of living space, a beautiful private garden and 15 acres of communal grounds
A four-bedroom chalet bungalow with three bathrooms and a spacious garden, £525,000
A two-bedroom flat with an open plan kitchen and two balconies, close to Arsenal station
A Grade II-listed home with six bedrooms, secluded landscaped gardens and views across Hadley Green
A Grade II-listed mansion with two apartments and a cottage, near Gretna Green
A three-bedroom Grade II-listed mews house with vaulted ceilings and roof garden
A spacious Grade II-listed family home with annexe and equestrian facilities among four acres of land in Itchingfield
A four-bedroom home with exposed brick walls and open fires in the picturesque village of Northill
A Grade II-listed property with five bedrooms and unique tower, overlooking Hastings Old Town
A charming five-bedroom detached family home, set within half an acre in Kew