The fundamentalist tendency at the FSA is at least having one positive side effect: it seems increasingly likely that the Co-Op won’t buy the 632 Lloyds branches that the bank must get rid of. As I’ve argued here before (ad nauseam) this is a really bad idea for the Co-Op, which has neither the capital nor the expertise to take on this thrown-together lump of financial services. The queue of buyers was always short, and it’s far from clear that the network can be lashed togther into a whole which is convincing enough even to be given away to Lloyds shareholders. The solution has been there all the time, if only Lloyds would see it. Buried in the group is one of the few untainted brands among the big banks, big enough to stand on its own and provide credible competition in the domestic market. Time to float off the Halifax.

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