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.
[SPOTLIGHT]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.
More on banking
M&S unveils Premium Current Account