The Co-operative Group has pulled the plug on its plan to buy 632 Lloyds Banking Group branches as part of the Project Verde deal.
With the Co-operative concerned about the economic environment, the mutual said it would not be in the best interests of the group’s members to proceed with the deal at the current time.
Peter Marks, group chief executive of the Co-operative Group, said that, having given detailed and thorough consideration of all aspects of the transaction, the group has decided to halt the deal.
He explained: “Having worked closely and constructively with Lloyds we are naturally disappointed to have reached this conclusion.
“However, against the backdrop of the current economic environment, the worsened outlook for economic growth and the increasing regulatory requirements on the financial services sector in general, the Verde transaction would not currently deliver a suitable return for our members within a reasonable timeframe and with an acceptable level of risk.”
Marks acknowledged that the transaction offered a significant opportunity to the group and the sector as a whole as it would have created a major challenger bank and defended the decision to explore it in the detailed way they had.
He added: “We were, however, clear from the outset that Verde was a complex transaction and that this was not the only option open to us to develop our Bank.
“We remain committed to driving the Co-operative Group forwards under our clear strategy and, as part of that, we will continue to develop our bank for the long-term, offering a real alternative on the high street with our strong, established brand and our reputation as a trusted financial services business.”