Lloyds may have chosen the Co-op as its preferred bidder for the sale of 630 branches in December but has to satisfy governance that the main board which includes a Methodist minister, a plasterer and a nurse will be strengthened before approving the purchase.
In the Financial Times it stated it was unlikely that a deal would be reached until at least the middle of the year as the Co-op needs to convince the City regulator it can run a larger banking business.
The purchase of the branches which will substantially make the bank a major player following the acquisition of the Britannia Building Society for about £1.5bn would triple the size of the Co-op’s banking arm from about 340 branches to almost 1,000.
The FSA is particularly keen for the Co-op to appoint more banking experts, particularly someone focused on risk to its main board.
The Co-op commenting on Thursday said
“We continue to make good progress on our thorough due diligence process, working together with Lloyds Banking Group and the FSA on a wide range of issues.”