Project Verde is the name Lloyds Banking gave to the mission to shed sufficient branches to appease the EU following the shotgun merger with HBoS. It’s fair to say that there hasn’t been a long queue of potential buyers for this particular piece of greenery. Indeed, the line is now down to just one, in the shape of the Co-Op, and the process is taking an inordinately long time.

Since bad figures always take longer to add up than good ones, this does not auger well, at least from Lloyds’ viewpoint. Now it seems that the FSA is getting cold feet about whether the greenhorns at the Co-op (still short of a chief executive in the banking arm) can afford to pay. The market has already voted, insofar as it can. Since the Co-Op has no quoted equity, it’s the listed debt that has taken the hit, and it’s not hard to see why. The mooted price tag of £1.5 billion for 632 branches looks absurdly expensive, especially since more premises suitable for turning into bank branches are becoming available at very co-operative rents every day.

The Co-Op seems to have quite enough to do already, having paid £1.6 billion for Somerfield’s supermarkets and £700 million for the Britainnia Building Society, all out of debt and retained profits. There is more to Project Verde than the real estate, but post-Vickers, retail banks are supposed to be rock solid. With no access to genuine risk capital, the Co-Op cannot afford to look even a little bit rocky. It has come through the credit crisis pretty well but. as I’ve said before, at anything remotely near £1.5 billion, this is a deal to pass up.

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