In its annual results today it says the opportunity to acquire the branches would strengthen its ambition in UK banking.
But it adds: “Our current bid is non-binding and we would only proceed if we could reach an agreement that was in the interests of our members and other stakeholders.”
Peter Marks, the chief executive of the Co-operative Group, is also reported to have told the BBC that the deal “may not go ahead”.
He is reported to have said: “There are significant economic and regulatory issues that we have to address and that’s what we’re working towards.
“Within the next few weeks we will complete our analysis and then we will tell the world whether we can do it.”
It was recently reported that The Co-operative Group was looking to revamp its board ahead of its bid for the branches because the Financial Services Authority has concerns about whether the board could handle the acquisition.
And last week Lloyds Group said it would not be announcing a deal with the bank in Q1 as planned, but would provide an update in Q2.
The Co-op group reported a pre-tax profit of £373m for 2011, down from £396m in 2010.
Meanwhile, The Co-operative Bank reported a pre-tax profit of £54.2m for 2011, after the deduction of significant items of £143.3m.
Significant items include provision for payment protection insurance mis-selling of £90m.
The bank consists of two primary operating segments – retail, and corporate and business banking.
Its corporate and business banking unit includes corporate banking, business banking, business services, Platform and Optimum.
Its operating profit for 2011 was £14.5m, down from £54.7m in 2010.
Meanwhile, Platform, the bank’s intermediary lender, advanced £600m of mortgages in 2011, the same as 2010.