Co-op could write-down £200m of IT investments if Lloyds acquisition goes through

By Sooraj Shah
22 Jan 2013 View Comments

The Co-operative Bank could write-down up to £200m of IT investments if it finalises a proposed acquisition of 632 Lloyds Banking Group (LBG) branches.

The Co-op Bank's annual profits could be impacted significantly if its proposal to acquire the branches is accepted, The Times has reported.

Further reading

If the deal goes ahead, the Co-op will have to write-off ongoing systems upgrades, including a migration to Infosys's Finacle banking platform, which was signed off in 2009 but has yet to take place, according to The Times.

This will result in a £200m write-down, The Times claimed, which is nearly as much as the Co-op Banking Group's total profits last year.

The Co-op Bank reportedly knew that it would have to write-down a figure close to £200m when it initially agreed terms with Lloyds last June.

Both banks signed a non-binding agreement, in which Co-op stated its intention to move from its existing IT system.

"The combined bank would ultimately operate on a separated version of the existing proven Lloyds Banking Group IT platform, which would be managed by LBG for the enlarged Co-operative Banking Group, on a managed service basis, under commercial market terms," the agreement reads.

The Co-op Bank is scheduled to release its annual financial results on 21 March when the exact figure is likely to be revealed, as are further IT strategy announcements.

In its 2011 financial statement, Co-op Bank said it was replacing its legacy banking systems and infrastructure with modern, flexible solutions, with investments made in a new financial crime management system, a banking mainframe upgrade, a new telephony system, and the start of re-platforming its core banking systems.

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