The Co-operative bank has agreed to buy 632 Lloyds TSB and Cheltenham and Gloucester branches along with the millions of customers attached to them.
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The takeover will see the Co-operative eventually use a separated version of Lloyds Banking Group's IT platform.
This will be managed by Lloyds Banking Group for the Co-operative through a managed service. The Co-operative bank said that 2015 will be the earliest point that systems will begin to be migrated to the Lloyds' platform.
“Once it becomes part of The Co-operative Banking Group, the TSB business would operate separately for a period of time ahead of integration with the existing Co-operative Banking Group business,” said a statement from the Co-operative Bank.
The current account customers being taken over will remain on the Lloyds Banking Group system and after a few years the Co-operative will migrate its other current account customers to it, which will be supported as a managed service.
Chris Skinner, CEO at financial services think tank Balatro, said this makes sense. “If you are gaining five million current account customers and you have one million there will be fewer to migrate.”
He said Lloyds Banking Group already runs multiple brands separately on its systems.
"It will probably treat it in the same way as it runs its other brands,” he said.
The sale of the Lloyds TSB and Cheltenham and Gloucester branches was demanded by European regulators after Lloyds was part-nationalised in 2009.
The Co-operative bank is paying £350m initially with another £400m depending on performance.