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.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Suggested Topics
News
people
News
A boy holds a chick during the Russian National Agricultural Exhibition Golden Autumn 2014 in Moscow on October 9, 2014.
news
Life and Style
love + sex
Sport
Ashley Young celebrates the winner for Manchester United against Newcastle
footballNewcastle v United 1 player ratings
Arts and Entertainment
Victoria Wood, Kayvan Novak, Alexa Chung, Chris Moyles
tvReview: No soggy bottoms, but plenty of other baking disasters on The Great Comic Relief Bake Off
Sport
Ashley Young celebrates the winner for Manchester United against Newcastle
footballNewcastle 0 Man United 1: Last minute strike seals precious victory
Life and Style
Tikka Masala has been overtaken by Jalfrezi as the nation's most popular curry
food + drink
Arts and Entertainment
Seth Rogan is one of America’s most famous pot smokers
filmAmy Pascal resigned after her personal emails were leaked following a cyber-attack sparked by the actor's film The Interview
News
Benjamin Netanyahu and his cartoon bomb – the Israeli PM shows his ‘evidence’
people
Arts and Entertainment
80s trailblazer: comedian Tracey Ullman
tv
News
i100
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Ashdown Group: Graduate Application Support Analyst

    £25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

    Reach Volunteering: External Finance Trustee Needed!

    Voluntary post, reasonable expenses reimbursed: Reach Volunteering: Would you ...

    Christine McCleave: FP&A Analyst

    £36,000 - £40,000: Christine McCleave: Are you looking for a new opportunity a...

    Recruitment Genius: Sales Executive - OTE £40,000

    £15000 - £18000 per annum: Recruitment Genius: This is a great opportunity for...

    Day In a Page

    War with Isis: Iraq's government fights to win back Tikrit from militants - but then what?

    Baghdad fights to win back Tikrit from Isis – but then what?

    Patrick Cockburn reports from Kirkuk on a conflict which sectarianism has made intractable
    Living with Alzheimer's: What is it really like to be diagnosed with early-onset dementia?

    What is it like to live with Alzheimer's?

    Depicting early-onset Alzheimer's, the film 'Still Alice' had a profound effect on Joy Watson, who lives with the illness. She tells Kate Hilpern how she's coped with the diagnosis
    The Internet of Things: Meet the British salesman who gave real-world items a virtual life

    Setting in motion the Internet of Things

    British salesman Kevin Ashton gave real-world items a virtual life
    Election 2015: Latest polling reveals Tories and Labour on course to win the same number of seats - with the SNP holding the balance of power

    Election 2015: A dead heat between Mr Bean and Dick Dastardly!

    Lord Ashcroft reveals latest polling – and which character voters associate with each leader
    Audiences queue up for 'true stories told live' as cult competition The Moth goes global

    Cult competition The Moth goes global

    The non-profit 'slam storytelling' competition was founded in 1997 by the novelist George Dawes Green and has seen Malcolm Gladwell, Salman Rushdie and Molly Ringwald all take their turn at the mic
    Pakistani women come out fighting: A hard-hitting play focuses on female Muslim boxers

    Pakistani women come out fighting

    Hard-hitting new play 'No Guts, No Heart, No Glory' focuses on female Muslim boxers
    Leonora Carrington transcended her stolid background to become an avant garde star

    Surreal deal: Leonora Carrington

    The artist transcended her stolid background to become an avant garde star
    LGBT History Month: Pupils discuss topics from Sappho to same-sex marriage

    Education: LGBT History Month

    Pupils have been discussing topics from Sappho to same-sex marriage
    11 best gel eyeliners

    Go bold this season: 11 best gel eyeliners

    Use an ink pot eyeliner to go bold on the eyes with this season's feline flicked winged liner
    Cricket World Cup 2015: Tournament runs riot to make the event more hit than miss...

    Cricket World Cup runs riot to make the event more hit than miss...

    The tournament has reached its halfway mark and scores of 300 and amazing catches abound. One thing never changes, though – everyone loves beating England
    Katarina Johnson-Thompson: Heptathlete ready to jump at first major title

    Katarina Johnson-Thompson: Ready to jump at first major title

    After her 2014 was ruined by injury, 21-year-old Briton is leading pentathlete going into this week’s European Indoors. Now she intends to turn form into gold
    Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

    Climate change key in Syrian conflict

    And it will trigger more war in future
    How I outwitted the Gestapo

    How I outwitted the Gestapo

    My life as a Jew in wartime Berlin
    The nation's favourite animal revealed

    The nation's favourite animal revealed

    Women like cuddly creatures whilst men like creepy-crawlies
    Is this the way to get young people to vote?

    Getting young people to vote

    From #VOTESELFISH to Bite the Ballot