Of Special Interest


[x] [x]

20th December 2011

Government the loser when Lloyds accepted Co-op bid?

It has been revealed that whereas the Cooperative bid more for the Lloyds bank branches thus winning the deal NBNK offered to create 2,000 new jobs with preference given to former and current Lloyds Banking employees made redundant.

Gary Hoffman, NBNK chief executive, confirmed the story. He also argued that the execution risk was very much higher with the Co-op compared with the NBNK bid. It has been rumoured for some time that the Co-op's integration of Britannia branches is not going well and is a long way from completion. On the other hand NBNK would have had to start its administration building from scratch as it has no operational capability currently. It was the building of this payment infrastructure that would have employed the 2,000 former Lloyds staff.

Whilst Lloyds Banking may have been better off financially accepting the Co-op bid (excluding the execution risk argument), arguably Lloyds biggest shareholder, the government, is worse off because the bank accepted the Co-op bid. The Co-op bid means there are 2,000 additional people the government potentially has to provide social security payments for and who are not paying income tax and national insurance. Perhaps this is an issue for the Treasury Select Committee to investigate?