The Lerwick branch of Lloyds TSB is among 632 Lloyds Group branches in the UK being taken over by the Co-operative Bank.
The move is part of a huge sale of the so-called Verde part of the merged Lloyds TSB and HBOS businesses.
A Co-op spokesman said that there were few details as yet to be disclosed about individual branches, including the Lerwick branch, but the signing of a heads of terms agreement yesterday (Thursday) between the TSB and the Co-op was a “major step” in the sale.
The bank would effectively be run as a separate business with jobs guaranteed by Lloyds TSB until the sale is completed sometime next year.
The sale follows a European Commission ruling aimed at shaking up the competitiveness of the UK high-street banking sector after the government bailed out Lloyds in 2007. The Lerwick branch is among 185 banks in Lloyds TSB Scotland. Another 161 branches of the Cheltenham & Gloucester are also being sold and the balance is made up of branches of Lloyds TSB England and Wales.
Lloyds Banking Group will write to its customers explaining the consequences of the deal after a binding sales agreement has been signed and has insisted that “branch staff will carry on providing the same level of service that you’re used to, and you can carry on your day-to-day banking in the same way.
“Once the transfer is complete, the customers and staff in the selected branches will stay with those branches – so the same staff will still be there to provide with the same level of service, in the same place, just under new ownership.”
The Co-op, which styles itself an ethical bank, will have a far greater presence north of the border following the transfer.
“One of the attractions of this deal is that it gives us a far greater scale in Scotland than we have at the moment,” a Co-op spokesman said.
According to business analysts, Lloyds dropped its price well below “full book value” of £1.5 to £2 billion to sweeten the deal in the present tough climate for banks and with no guarantee customers will remain with the bank following its transfer.
Verde has between three million and five million customers, 4.6 per cent of the UK current account market, with £25 billion of deposits and £65 billion of mortgages. It also has around 9000 employees.
The deal will give the Co-op 900 high street branches in the UK and make it a major player in the banking market.
According to Lloyds Group, no branches are closing as part of the transfer and after it is complete, Lloyds TSB will still have a strong network of over 1,300 branches in England and Wales.
Unite national officer David Fleming said the union, which has members in both the Lloyds and Co-op workforces, welcomed the news that the Co-op had now got agreement in principle to purchase over 600 LBG branches.
“This brings to an end a long period of uncertainty for the staff, who will welcome the clarity this decision will bring,” Mr Fleming said. “It is without doubt a positive development for the diversity of the banking sector. Unite will now work with both the Co-op and LBG managements to ensure that there is a smooth transition for the workforce, with jobs and terms and conditions protected.”