Lloyds branches sale called off

The head of the Co-operative Group Peter Marks has said that "banking has become very difficult" in the UK and that economic growth is too poor to expect a profit.

He told ITV News' Economics Editor Richard Edgar that the Co-op remains committed to its banking operation but that he sees no point in expanding with interest rates likely to stay so low.

Read: Planned sale of 632 Lloyds branches to Co-op collapses

Lloyds has announced that TSB Bank is being set up as a separate business that will be seen on the high street from this summer.

A statement on the bank's website said: "The Group continues to make good progress in the creation of Verde as a stand-alone bank.

"A strong management team is in place and we have made good progress in creating segregated IT systems on the proven Lloyds Banking Group platform ...

"Detailed plans are in place for a rebranding of the business as TSB which will be visible on the High Street during the summer of this year, at which point the TSB Bank (Verde) will operate as a separate business within Lloyds Banking Group."

Lloyds has given the following explanation for the collapse of the planned sale of more than 600 branches to the Co-operative Group, citing the Co-op's board:

Lloyds Banking Group's sale of more than 600 branches to the Co-operative Group has collapsed.

Part-nationalised Lloyds, which is being forced by Europe to sell the branches after its £20 billion taxpayer bailout during the financial crisis, will instead pursue a stock market flotation for the division this summer.

The Co-op has reportedly struggled to plug a £1 billion capital gap needed to complete its takeover of the 632 Lloyds branches, blaming the weak economic outlook and heavy regulatory burdens.

Lloyds Banking Group's sale of more than 600 branches to the Co-operative Group has collapsed after the Co-op said it cannot proceed with the deal.