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| What the collapse of the Lloyds and Co-op banking deal means to you | What the collapse of the Lloyds and Co-op banking deal means to you |
| (about 21 hours later) | |
| Co-operative Bank has announced that it will no longer buy 632 branches from Lloyds TSB. | Co-operative Bank has announced that it will no longer buy 632 branches from Lloyds TSB. |
| What does this mean for customers? | What does this mean for customers? |
| Lloyds has millions of customers at its 1,800 branches, of which 4.8 million were due to transfer to the Co-op. The breakdown of the deal means these people will not become Co-op customers. However, neither will they stay with Lloyds. Part of the original plan was to create a separate spin-off bank under the old TSB brand, which would then transfer to Co-op. This part of the plan will go ahead, with the intention of selling off the accounts and branches in the future, probably through a shares issue. Those 4.8 million people will become customers of TSB. | Lloyds has millions of customers at its 1,800 branches, of which 4.8 million were due to transfer to the Co-op. The breakdown of the deal means these people will not become Co-op customers. However, neither will they stay with Lloyds. Part of the original plan was to create a separate spin-off bank under the old TSB brand, which would then transfer to Co-op. This part of the plan will go ahead, with the intention of selling off the accounts and branches in the future, probably through a shares issue. Those 4.8 million people will become customers of TSB. |
| Does that include me? | Does that include me? |
| If you have been told that your account is one of those held at one of the branches that was being sold off to Co-op then yes, you are affected and by September will be a customer of TSB. Lloyds has already notified affected customers that they are due to switch over, so that process will continue. The TSB brand will start appearing on the high street during the summer. The change of plan might be a relief for some customers, as previous mergers have caused problems as banks have struggled to integrate their systems. | If you have been told that your account is one of those held at one of the branches that was being sold off to Co-op then yes, you are affected and by September will be a customer of TSB. Lloyds has already notified affected customers that they are due to switch over, so that process will continue. The TSB brand will start appearing on the high street during the summer. The change of plan might be a relief for some customers, as previous mergers have caused problems as banks have struggled to integrate their systems. |
| Will I still get the same deal on my savings and mortgages? | Will I still get the same deal on my savings and mortgages? |
| Yes. The original idea was for customers to retain their accounts under the same terms until Co-op took over, then it would probably have begun to phase out the old Lloyds accounts and move customers on to its own deals. Lloyds says that now customers will continue with the same deals until the TSB bank is sold off. Anyone in a deal with fixed terms and conditions – for example, someone on a fixed-rate mortgage – will continue until the end of their contract. | Yes. The original idea was for customers to retain their accounts under the same terms until Co-op took over, then it would probably have begun to phase out the old Lloyds accounts and move customers on to its own deals. Lloyds says that now customers will continue with the same deals until the TSB bank is sold off. Anyone in a deal with fixed terms and conditions – for example, someone on a fixed-rate mortgage – will continue until the end of their contract. |
| Will my account details change? | Will my account details change? |
| No, sort codes and account numbers will stay the same. There will be a change to banking licences as TSB will get its own, so you will get separate protection for money held there and any accounts you may still have with Lloyds. Under the Financial Services Compensation Scheme you will have £85,000 of savings protected with each brand. | No, sort codes and account numbers will stay the same. There will be a change to banking licences as TSB will get its own, so you will get separate protection for money held there and any accounts you may still have with Lloyds. Under the Financial Services Compensation Scheme you will have £85,000 of savings protected with each brand. |
| What if I don't want to move? | What if I don't want to move? |
| You can apply for a new current account at Lloyds and switch back. Lloyds is not allowed to encourage people to stay, as the object of the exercise is to reduce its share of the current account market, but it is not banned from taking you back. | You can apply for a new current account at Lloyds and switch back. Lloyds is not allowed to encourage people to stay, as the object of the exercise is to reduce its share of the current account market, but it is not banned from taking you back. |
| My account is staying at Lloyds – will there be any changes? | My account is staying at Lloyds – will there be any changes? |
| The number of branches that you can use will be reduced as although the TSB brand will work on Lloyds platforms, it will operate as a separate network. However, there will be a transition period for customers and and Lloyds says it will attenpt to minimise disruption. | The number of branches that you can use will be reduced as although the TSB brand will work on Lloyds platforms, it will operate as a separate network. However, there will be a transition period for customers and and Lloyds says it will attenpt to minimise disruption. |
| I'm a Co-op customer – should I be worried? | I'm a Co-op customer – should I be worried? |
| Co-op bank reported a loss in March and said 2012 had been a "challenging year", but that its capital ratio (a sign of its financial strength) had increased year-on year. It says that it has pulled out of the deal with Lloyds because it did not offer a suitable return to its members with an "acceptable level of risk". | Co-op bank reported a loss in March and said 2012 had been a "challenging year", but that its capital ratio (a sign of its financial strength) had increased year-on year. It says that it has pulled out of the deal with Lloyds because it did not offer a suitable return to its members with an "acceptable level of risk". |
| There has been some speculation it might withdraw from banking altogether. However, departing chief executive of the Co-operative Group, Peter Marks, says the plan is "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." | There has been some speculation it might withdraw from banking altogether. However, departing chief executive of the Co-operative Group, Peter Marks, says the plan is "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." |
| What does this mean for competition in the current account market? | What does this mean for competition in the current account market? |
| There has been much talk about the need for new brands to enter and shake up the market, but progress has been slow. Metro Bank and Handelsbanken have launched, but they have very few branches so far, meaning they are not yet in a position to take on the big banks. The sale of Lloyds branches to Co-op would have made the smaller bank a genuine competitor to the traditional players. | There has been much talk about the need for new brands to enter and shake up the market, but progress has been slow. Metro Bank and Handelsbanken have launched, but they have very few branches so far, meaning they are not yet in a position to take on the big banks. The sale of Lloyds branches to Co-op would have made the smaller bank a genuine competitor to the traditional players. |
| The consumer group Which? says the collapse of the deal is bad news. "The Co-op's decision is a setback to the government's efforts to tackle the unhealthy dominance of our biggest banks," says its executive director, Richard Lloyd. "This would have given more choice to consumers who are sick and tired of shoddy service and unfair fees and put more pressure on the big banks to work for customers, not bankers." | The consumer group Which? says the collapse of the deal is bad news. "The Co-op's decision is a setback to the government's efforts to tackle the unhealthy dominance of our biggest banks," says its executive director, Richard Lloyd. "This would have given more choice to consumers who are sick and tired of shoddy service and unfair fees and put more pressure on the big banks to work for customers, not bankers." |
| Derek French of the Campaign for Community Banking Services says the new network of spun-off branches "is not credible as a challenger on its own" because they are concentrated in the north of England. | Derek French of the Campaign for Community Banking Services says the new network of spun-off branches "is not credible as a challenger on its own" because they are concentrated in the north of England. |
| Top savings accounts | Top savings accounts |
| Derbyshire BS | Derbyshire BS |
| Aldermore | Aldermore |
| Nationwide BS | |
| Powered by MoneySupermarket for the Guardian | Powered by MoneySupermarket for the Guardian |