The deal that would allow Co-operative Bank to purchase more than 600 branches of the Lloyds Banking Group is under grave threat not to push through. This is due to the discovery of a GBP1 billion capital hole according to the Financial Times.
The capital deficit first emerged from the regulator's analysis of its balance sheets after the Bank of England through its Financial Policy Committee announced shortfalls all across the banking sector to the tune of almost GBP 50 billion.
In order to save the deal, a list of options would be made available to the Co-op's board in March. One of these would finding a partner from Continental Europe to join the Lloyds bid together with Co-op.
Co-op is a conglomerate of businesses ranging from food to funeral homes. One of its businesses is banking as well as non-life insurance which is being eyed to be sold and the proceeds then be used to address the capital deficit..
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