Co-Operative Bank CFO Quits, Dealing Blow to Lloyds SaleHoward Mustoe and Gavin Finch
Co-Operative Bank Plc Chief Financial Officer James Mack quit after less than two years, fueling speculation the firm’s 750 million-pound ($1.2 billion) purchase of Lloyds Banking Group Plc branches is foundering.
Mack, 41, will take up another job in the industry, the bank said in a statement today, without identifying the competitor. The lender has started to search for a replacement and Mack will stay until a candidate is found, it said. Patrick Tooher, a spokesman for the bank, declined to comment further.
The purchase of the Lloyds branches, agreed in July, has dragged on as regulators pressed Co-Op to appoint a full-time chief for its lending unit amid concern the company’s managers don’t have enough banking experience to run the enlarged business. Lloyds has said it may opt instead to sell the 632 branches in an initial public offering to meet the November deadline set by European regulators for the disposal.
“This takes the chances of a sale down to 50-50,” said Christopher Wheeler, a London-based analyst at Mediobanca SpA with a neutral rating on Lloyds. “Lloyds will be brushing off their IPO possibility, though the worry is that RBS has dusted off the IPO possibility for the sale of its branches too,” putting them in competition for investors.
Royal Bank of Scotland Group Plc is weighing an IPO of 316 branches after Banco Santander SA aborted talks to buy them in October. Both Lloyds, which reports full-year results on March 1, and RBS are being forced to sell branches to comply with European Union state aid rules after they were bailed out by taxpayers during the 2008 financial crisis.
In July, Co-Op said Paul Pester, the Lloyds executive running the branches being sold, would become the chief of the merged bank, replacing Barry Tootell, who was named acting chief executive officer in July 2011 after Neville Richardson left. Co-Op CEO Peter Marks said in August he was “confident” that the firm would complete the purchase within “a few months.”
A purchase would more than double the number of Co-Op’s branches to 1,000. The lender will add 4.8 million customers with 3.1 million checking accounts, providing the combined company with 7 percent of the consumer account market.