Failure, Greed and Corruption in Banking - Good News for the Co-op?

Could the furore over the behaviour and culture of the UK’s largest banks be just the thing that the Co-op needs to build the scale of its banking division?

This useful article in the Guardian analyses whether recent events might combine to make the upcoming growth in the Co-op’s network really well timed.

The UK retail banking market is currently dominated by the “Big Four” who together have over 75% of the UK market: these are Lloyds (including Halifax), Barclays, RBS and HSBC.

However, under the terms of the UK govt bailout, Lloyds is being forced to sell over 600 of its branches to the Co-operative Bank in a move that will see the Co-op Bank triple the size of its branch network (although it will still only have around 5% share of the retail banking market).

Will disgruntled customers from NatWest, fed-up with the inconvenience of the computer systrem failure, decide to switch to the Co-op? This article suggests that there is widespread anger at the effect of the systems crash and how Nat West & RBS handled it. But switching banks is perhaps easier said than done?

Will existing customers of Barclays, outraged by the culture of greed and perceived corruption at the bank, also look to switch their loyalty to the Co-op?

Will customers be attracted to the Co-ops mutual status and strong reputation for ethical business practice and corporate social responsibility?

Expect to see some increased promotional activity from the Co-op Bank in the next few days, weeks and months as they try to take advantage of the problems experienced by their much larger competitors.