Today’s Co-operative Bank purchase of 632 branches from Lloyds Banking Group for £750 million is a staggeringly good deal for members.
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Today’s Co-operative Bank purchase of 632 branches from Lloyds Banking Group for £750 million is a staggeringly good deal for members.
The sandal-wearers amongst you will be happy that Co-operative banking can now be accessed through another 632 banks.
But that would be to miss out yet another example of the hard-won success of a hard-nosed generation of co-operators who are setting up successful co-ops from Co-operative Energy’s service to Lilac Leeds’ affordable housing.
Those hard-nosed co-operators will point to the following numbers on this Lloyds purchase: Lloyds shareholders valued their business very highly in 2006. The net asset value was £1.95 per share, but the shareholders were willing to value that at a multiple of 2.9 times, with the share price recorded at £5-71.5p on December 31st 2006.
• Taking on the energy giants: The co-operative insurgency gains ground 11 May 2012
• We need more community and co-operative ownership of energy 13 Mar 2012
• Institutionalised prejudice against co-ops will delay economic recovery 9 Mar 2012
• Northern Rock sale shows Osborne’s failure of ambition on real bank reform 17 Nov 2011
• The case for the role of co-operatives in childcare 28 Sep 2011
So while many will focus on the fact the Co-op has bought a business with £1.5 billion of equity, in fact, that business was valued by Lloyds shareholders at £4.4 billion. The smart people at the Co-op have just bought a business that capitalism valued £4.4 billion for just £750 million. Smoothies all round!
21 Responses to “Co-op Bank’s purchase is a staggeringly good deal for members”
Anonymous
The deal is that the Coop pays about half the total now – some 300m – and the rest in tranches later according to the amount of business being done in the new branches, with payments continuing until sometime in the late 2020s.
It’s a good deal for the Coop no matter how many quibbles you may try to raise.
Anonymous
It is the logic of banking. If they offered better terms than other banks, they would soon come a cropper by being attacked by their competitors.
For example, they can’t be more lax in tolerating overdrafts or fail to pursue debtors, they can’t offer higher rates of return than the general market or make it easier to loan money. They would go out of business.
But that is hardly an argument in favour of the current corrupt cartel.
JC
I didn’t say it wasn’t a good deal for the Co-op. It is in that it helps them expand their branch network at a time when some people are feeling ready to switch their accounts to an untainted bank. My comment was about the way this was presented and that the Co-op was being very smart about it.
What it does show unfortunately is that it is next to impossible for a new bank to start in the UK as the regulations are such that only an existing bank can pass muster.
BevR
RT @leftfootfwd: Co-op Bank’s purchase is a staggeringly good deal for members http://t.co/jmHqWP8N
Mark Stevo
Yeah, I tend to agree with this. £750m looks like a pretty decent deal, especially given the payment structure, but to suggest this is worth £4.4bn is optimistic in the extreme.