The Co-operative Bank to buy 632 Lloyds bank branches
Co-operative Bank to become sixth biggest high street bank following purchase of 632 branches from Lloyds.
The Co-operative Bank has come to an agreement with the Lloyds Banking Group to buy 632 of its branches.
The move will see the Co-op take over 6% of the UK market, as well as some 4.8 million customers, plus the TSB and Cheltenham & Gloucester brands. As a result, the Co-op will become the sixth biggest banking name on the high street.
Are you an affected customer?
Lloyds has published the list of all of the branches it will be selling to the Co-op, which you can see here.
The 4.8 million new customers include 3.1 million current account customers and 100,000 business banking customers. The Co-op will use the TSB brand for these new branches initially, with the transition kicking off next summer and currently expected to finish in November 2013.
So what can we expect from this new contender? Let’s take a look at what the Co-op does already, and how well it does it.
Current accounts
The Co-op offers three current accounts worth a look.
The Current Account Plus is available to people who pay in at least £800 a month, and comes with a fee-free £200 overdraft and access to exclusive mortgage deals.
The Privilege Current Account has a £200 overdraft that is not only fee free, but interest free too. It also boasts worldwide family travel insurance, mobile phone insurance, exclusive mortgage deals and 20% off your first year’s home insurance premium if it's from the Co-op. However, it will set you back £9.50 a month.
Finally, there’s the Privilege Premier Current Account, which has a slightly larger overdraft of £300 and RAC UK and European breakdown cover on top of all the above. That will set you back £13 per month.
Personally, I’m not a huge fan of packaged current accounts as they are a waste of money for many. However, when you compare what’s on offer to the new M&S current account, for example, I’d say the Co-op represents a far better bet.
It’s also worth noting that every year in our lovemoney awards the Co-op performs very strongly in terms of customer service for current accounts. It will be interesting to see whether the bank can maintain such high standards with such a massive expansion in its customer base.
Savings
When it comes to savings bonds, the Co-op also has some decent looking deals. For example, its one-year fixed term deposit account pays 3.50% AER, and can be opened with £1,000. That’s not a million miles off the market leader from Coventry Building Society, which pays 3.65% and can be opened with £1.
Its two-year bond, paying 3.75% AER and with a minimum deposit of £1,000, is also very competitive, paying just 0.05% less than the market leaders from Nationwide and the AA. And on three-year bonds, the Co-op is top of the tree, paying 4% AER.
However, with an easy access account paying 0.25% and a Cash ISA paying 1%, you’re best off elsewhere if you want to keep your savings within reach.
Loans
The Co-op is also a long way from a market leader in the loans market. It charges a typical APR of 7.9% on loans between £7,500 and £14,950.
However, with Clydesdale Bank, Derbyshire Building Society and Sainsbury’s Bank you can borrow £7,500 over a five-year period for just 5.9% – a full 2% cheaper!
Credit cards
Another area the Co-op doesn’t exactly make waves is on credit cards. It has a members credit card which pays cashback on the money you spend, but this is easily beaten by cards like the American Express Platinum Cashback, the Capital One Aspire World and the Santander 123 credit card.
For a look at the top cashback credit cards, check out Asda launches cashback credit card.
Mortgages
The mortgage range from the Co-op is pretty mixed. For example, its two-year fixed rate for borrowers with a 75% deposit comes with an interest rate of 4.29% and a £999 fee.
But you can knock a full 1% off that with the deal from the Post Office, charging 3.29% and with a £995 fee.
However, on the plus side it is one of the few lenders to offer true long-term fixed rates of ten years, with deals of 4.99% with a £999 fee and 5.19% with no fee, both for borrowers with deposits of at least 25%.
When is a bank not a bank?
Finally, a quick word on the structure of the Co-op. While it calls itself a bank, it is actually a mutual. That means (in theory) that it is run in the interests of members rather than shareholders, much like building societies, and so is traditionally a little more ethical.
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Comments
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Great News!! I have banked with LloydsTSB in the past but now bank with Cooperative. The Cooperative give a service that is absolutely first rate. Never had cause to complain, but have been bowled over by service. An example. I was in Australia and wanted to check my account online. Having not used for a week or two or through the with the heat or both totally messed up my log in. Called the Cooperative, within 2 minutes back on line. No waiting in a queue listening to silly music and being told how important my call was whilst raking in the cash from a premium rate. Straight forward good customer service. Tell me how much my phone bill been if I had been calling Lloyds from Australia! Thats just one instance, but it is totally consistant with the great service I have received from Coop. If you bank with Lloyds you will have a chance to stay with them, but I would take the oppotunity to give the Cooperative a try. From personal experience I think you will be pleasantly suprised! I have the Privelage account for which I pay £9.50 a month. I get worldwide travel insurance for the whole family, mobile insurance, free access to airport lounges 4 times a year and a fee free, interest free £200 overdraft. I am about to upgrade to the Privelege plus account for £13.50 which includes RAC breakdown and a £300 OD for £13.50. I love to travel and my car breakdown is due for renewal 1 Sept so it represents great value to me. For no fee you get a fee free £200 OD Basically £200 buffer for free is not a bad deal, what do Lloyds offer for free?
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I would find it very irritating to be told that I used to bank with Lloyds, but now I'm a Coop customer, just because at some point in the past I opened a bank account at a particular branch which is now being sold. Of course companies can sell their assets like buildings to other companies, but I find it cheeky that customers are being treated as transferable as well. Customers should be given the option of staying with Lloyds, not forced to transfer and then go through the rigmarole of switching back to Lloyds. It will be interesting to see whether the enlarged Coop Bank will continue to go around parading its conscience in its marketing, and whether it is able to retain all these extra customers when its basic offerings seem frankly not very good.
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Lloyds PLC should float the branches that it is forced to sell under new management, and distribute the newly formed company shares to existing Lloyds share holders. Newly floated company would become totally separate from Lloyds banking group. Existing share holders become share holder in two newly formed companies, ie Lloyds and TSB.
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21 July 2012