Simon: Co-op bank remains a credible alternative to high street names

On the face of it, the collapse this week of the deal for Co-operative Bank to buy 632 branches from Lloyds Banking Group looks like bad news. At a stroke, it would have given the mutual the clout to take on the existing high street banks.

But I reckon the move will yet yield a happy ending for the Co-op, and therefore the millions of people fed up with the high charges and poor service offered by their existing bank account.

The bank will avoid the teething troubles that would have certainly resulted from trying to bolt on the back-room IT systems to its own existing network. Santander can attest to that. The Spanish-owned bank is still forced to deal with problems caused by the fallout from its takeover of Alliance & Leicester several years after the deal was actually concluded.

And with the confusing economic uncertainty continuing under the current Tory-led Coalition government, the timing also wasn't right for the mutual to take on a huge extra financial responsibility. But the move should not stop us from thinking of the ethical Co-op as serious alternative to the traditional banks, despite some commentators suggesting that it may withdraw from banking altogether.

The opposite is the case, I've been assured. Co-op Group chief Peter Marks told me: "We've been in banking for well over 100 years, and we intend to continue to grow and develop our banking business, offering a real alternative."

I hope the bank succeeds, for all our sakes.