It’s certainly a weird time to ditch the top job at the Co-op. But just two weeks after signing the deal to buy 632 branches of Lloyds Banking Group for £750m, Peter Marks is retiring from the chain. The move has sparked concern with the Financial Services Authority, which only found out about the resignation yesterday – the regulator was already dubious about the so-called ‘Verde’ deal to buy the branches. City analysts this morning suggested the Co-op might struggle to focus on planning for integration of the new banks if they now have to search for a new CEO, too.
The move could be a real spanner in the works for the Co-op (and the management who still want the deal to go through). It is thought that the FSA still has the power to put the brakes on, and the resignation of the boss at such an important time is bound to prick some ears at the regulator. The last thing the Co-op wants is to give the busybodies at the FSA any more time to dither.
Any delay on the deal will be a stinger for Lloyds. It has been forced to divest the 632 branches after it was bailed out by the government, because of EU legislation that puts a cap on state aid for companies. If the regulator does get sniffy about things, the banking group will have to wait even longer for its cash. It only gets £350m at the front end of the deal, with a further £400m spread over 15 years, depending on how well the new Co-op banks run. The total cash is well short of the £2bn it was hoping to raise by offloading the branches.
So, at possibly one of the most significant junctures in the Co-operative’s history, the CEO is leaving. But whilst the time is not ideal, Marks has been the chief architect of the deal with Lloyds and has done a lot to diversify the Co-op's business over the years. Recognising that the chain couldn't compete properly against the big four supermarkets, getting into financial services was a way of shoring up the Co-op's future. Marks joined as a 17-year-old shelf stacker at the supermarket.
He said: 'Integration [of the banks] is going to take three to five years – that will take me to my late 60s. Having done the deal, it now feels like the right time to hand it over to my team.' He also said he wants to spend more time with his wife and their new grandchild in the family. Touching stuff.
Nonetheless, it is a wind up for Lloyds Banking Group, an alarm bell for the FSA, and no doubt a large pension pot for Marks. What a difference a day makes…