Valued at nearly £750m, the deal was initially inked in summer last year and was scheduled to be announced this week, as reported by The Financial Times.
The banking group was ordered by the UK government to dispose of the so-called Verde network of 630 branches in a bid to pay back to creditors, who infused £21bn in the bank during the financial crisis of 2008.
The 39% British taxpayers owned lender was given the deadline by the end of the year to complete the sale process.
Lloyds and Co-operative did not comment about the development, but it is believed that the cancellation will affect both parties, as reported by the news agency.
If the deal would have been completed, it would have tripled the size of the Co-op’s banking arm and increase its share of UK branches to 10%.
Now, the British lender has left with ‘plan B’ to launch the branch network as a separate business entity, named as TSB.
Most recently, the Co-operative Banking Group decided to offload the life insurance business known as Co-operative Insurance Society (CIS) to mutual life and pensions company Royal London, for £219m, in a bid to shore up the required capital to fund the deal.
