Co-op ‘making progress on Lloyds deal’

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The Co-operative Group has played down reports of a showdown with the Financial Services Authority over its unique business model.

Britain’s biggest mutual hopes to become a major high street player in financial services by taking on 632 branches that Lloyds Banking Group must offload as a condition of receiving state aid.

The deal would give the Co-op nearly 1,000 branches and around seven per cent share of the current account market.

A spokesman for the Manchester-based group said: “As part of our thorough due diligence process, we are working together with Lloyds and the FSA on a range of issues, as you would expect in a deal of this significance. We are making good progress.”

The FSA declined to comment. It is likely though that the FSA would study the Co-op’s structure and capital levels before approving any deal.