James Moore: Lloyds deal with Co-op is best for high street

Outlook Life can't be easy for a banking group without a bank. It's even harder when you have investors who give you a lot of money with which to buy one, only to watch every available deal slip through your fingers.

NBNK and its directors are struggling to justify their existence right now, which was doubtless part of the reason for yesterday's attempt to butt in on Co-op's conversations with Lloyds over the (so far) stalled Project Verde deal.

The trouble is, it hasn't worked. Lloyds has acknowledged receipt of a letter from NBNK, but says it is pressing ahead with exclusive talks with the Co-op.

These have been beset with regulatory issues, and you can see why the Financial Services Authority might be a little concerned. Co-op is an enormous conglomerate owned by its customers, of which its small bank is only a small part. Verde would create a rather big bank, accounting for more than half the business.

All the same, as Co-op has pointed out, it has run the bank it has at a profit for several years, by contrast to certain larger rivals. What's more, in putting that bank together with Project Verde it ought to create a genuine, and rather distinctive, challenger to the existing players.

The alternatives are a flotation or reopening talks with NBNK, which was kicked out of the original bid process but says the proposal outlined yesterday offers something new.

Structurally that is indeed the case: NBNK says it has found a way to offer Lloyds shareholders either a cash payout or shares in the new NBNK bank.

This appears to be rather canny. If the company can indeed pull it off – and it would still need to tap its shareholders for the money – it is holding out the prospect of a windfall for Lloyds shareholders.

Lloyds might not be all that keen on this. A sale of Verde would provide it with a useful slug of capital that would keep regulators happy. But a certain rather large shareholder with a truly enormous debt problem might be.

The trouble is that rather large shareholder (the Government) has a stated policy of creating a challenger bank to the existing players. Verde, either floated as an independent business or sold to NBNK, would not have sufficient market share. As an addition to Co-op, however, it would. A powerful, new-look Co-op Bank would be a welcome force on the high street. If this can still be accomplished, it should be.

Start your day with The Independent, sign up for daily news emails
Sport
England's women celebrate after their 3rd place play-off win against Germany
Women's World CupFara Williams converts penalty to secure victory and bronze medals
Arts and Entertainment
Ricardo by Edward Sutcliffe, 2014
artPortraits of LA cricketers from notorious suburb go on display
News
newsHillary Clinton comments on viral Humans of New York photo of gay teenager
Arts and Entertainment
The gang rape scene in the Royal Opera’s production of Gioachino Rossini’s Guillaume Tell has caused huge controversy
music
ebooks
ebooksAn introduction to the ground rules of British democracy
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.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

Gaping hole at the heart of the European Union

Treatment of Greece has shown up a lack of genuine legitimacy
Number of young homeless in Britain 'more than three times the official figures'

'Everything changed when I went to the hostel'

Number of young homeless people in Britain is 'more than three times the official figures'
Compton Cricket Club

Compton Cricket Club

Portraits of LA cricketers from notorious suburb to be displayed in London
London now the global money-laundering centre for the drug trade, says crime expert

Wlecome to London, drug money-laundering centre for the world

'Mexico is its heart and London is its head'
The Buddhist temple minutes from Centre Court that helps a winner keep on winning

The Buddhist temple minutes from Centre Court

It helps a winner keep on winning
Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate
Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'