It was claimed by The Times that a six-page memo outlining the reasons why the Co-op may not be a suitable candidate to take on 632 Lloyds branches was ‘physically’ handed to Sir Win Bischoff by Lord Levene of Portsoken. Apparently a witness was in the room when the document was handed over.
This is problematic for two reasons. One, it suggests that top-level management at Lloyds knew the deal could be a dud but pursued it for a further 16 months. Two, it means knowledge about the Co-op’s financial black hole was circulating for more than a year before it became public knowledge.
One sentence in the dossier said: ‘Intelligence suggests that the Co-op’s systems and processes are in disarray and is unprepared for the challenges ahead.’ A pretty serious claim to ignore.
Still, Bischoff told MPs last week that he does not recall having been handed the memo and did not know whether it was circulated to the other members of the board, and Lloyds said it has no comment at the moment.
This story could run and run however, because board minutes (from NBNK which was making a rival bid for the branches) show that members approved a decision to inform Lloyds that the situation with the Co-op could be dodgy. How such an important piece of information could have just ‘got lost’ along the way raises serious questions.
Any suggestion that Lloyds was trying to shove the deal through is not helped by the fact that Lord Levene has written to George Osborne saying that Lloyds felt politically pressured into doing the deal with the Co-op instead of NBNK, because this would help the reputation of mutuals.
None of this is likely to help Lloyds in its ongoing efforts to sell the 632 branches in question. No wonder it has just requested a two-year extension on the deadline from the European authorities...