Concerns over Co-op taking on 600 Lloyds branches

Lloyds have to sell branches to keep within European rules after the bail out Photo: PA

Concerns over whether the Co-op group can handle taking on more than 600 branches of Lloyds appear to be at least part of the reason for the delay in progressing the deal that would create a huge new force in high street banking.

Lloyds today has said that it will give an update on the deal in the second quarter of the year - that is a way of saying in City code, it has been delayed.

They have even gone so far as to remind the markets that they retain the option of selling off the branches in a big chunk on the stock market, rather than selling them to one particular buyer.

Lloyds, which is undergoing big changes and shedding thousands of staff, has to sell the branches to keep within European rules after it was bailed out to the tune of £21 billion by the taxpayer.

The Financial Services Authority are understood to have worries over the expansion Credit: REUTERS/David Moir

In December last year they announced that Co-op had won the race to buy them.

But the Financial Services Authority is understood to have worries about whether or not the Co-op has the expertise to handle such a dramatic expansion.

It appears while that is being sorted out, the deal is, at least for now, being held up.