Coventry to buy Co-op Bank as mutuals beef up

COVENTRY Building Society has agreed to pay £780m for the Co-operative Bank as months of takeover talks reach a ‘welladvanced’ stage.

A combination of the two businesses, which between them have a balance sheet of £89bn, would create Britain’s second-biggest building society by assets and seventh-largest lender overall.

The firms, which together serve more than 4m customers and employ more than 6,000 people, said last year that they were discussing a deal.

It would see the Co-op return to mutual ownership after a spell in the hands of private investors after its near-collapse a decade ago.

The tie-up would be the latest in a round of consolidation between UK lenders, including Nationwide’s £2.9bn takeover of Virgin Money. But Coventry’s board has decided not to put the deal to a vote of its members who, under its mutual structure, own the business.

Coventry and the Co- op said: ‘ Discussions are well advanced, the society has completed substantive due diligence to its satisfaction and the parties are working to enter into definitive agreements.’

However, it cautioned that there was ‘no certainty at this stage’ that a deal would occur and that it would be subject to regulatory approval.

Coventry will ‘seek to integrate the bank gradually over several years’ and the lenders will operate under their separate brands as they are brought together.

There has been no announcement on whether the Co- op Bank name will disappear.

The plan is that the bank’s customers will become members of the building society ‘ over a period of time post-completion’.

Coventry chief executive Steve Hughes said: ‘This is an exciting moment. The Co-operative is a financially stable, profitable organisation with a shared heritage, and products and services that complement our own.

‘Its customers, colleagues, branches, mortgages and savings balances, and the additional products and services it provides, will make us stronger.’

Separate deals have seen Barclays agree to buy Tesco’s retail banking arm while the Co- op has bought Sainsbury’s Bank’s mortgage portfolio.