Coventry agrees £780m takeover of Co-operative
Business@inews.co.uk
Coventry Building Society has agreed a £780m potential takeover of rival high street lender The Cooperative Bank.
The deal, if completed, will create a major new high street challenger bank with nearly five million customers and reserves of £89bn.
A non-binding deal has been agreed for an all-cash acquisition of Co-Op Bank, the firms confirmed in a statement. Discussions, which have been taking place over several months, were “well advanced” but remain subject to approval.
Both lenders said they plan to continue to operate under their current names and branding while they work on the tie-up, a process that could take several years.
Coventry aims to integrate Co-op
Bank gradually over several years, with the bank’s customers eventually becoming members of the building society.
Building societies like Coventry, the UK’s third-biggest, are mutually owned by members rather than shareholders, and those members typically have different benefits and ownership rights than stockholders.
Coventry said its members would not be invited to vote on the proposed tie-up, mirroring a decision by its larger rival, Nationwide, which is seeking to take over Virgin Money.
The society is preparing to hold its annual meeting next week, where the decision not to offer a vote to members could face questions.
Coventry said the deal, should it receive backing from members and the regulator, would give it a business savings and current account proposition,
Co-op Bank has 50 branches across the UK with about 3,400 staff. Last month, it said it was planning to cut about 400 jobs across the bank as part of efforts to cut costs.
as well as an “enlarged, national brand footprint”.
It means Co-op Bank would return to a mutual ownership structure that it had more than 10 years ago when it was part of the wider Co-op Group, meaning it is owned by members rather than shareholders.
It parted ways with the group in 2017 when it fell into deep financial difficultly and was rescued by American hedge funds. It is now owned by private equity investors.
The chief executive of Coventry Building Society, Steve Hughes, said it was an “exciting moment” for the group, adding: “The Co-operative Bank 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 and enable us to continue offering the value and service that matters to members and customers alike.
“We have the people, capability and the financial strength to bring both organisations together successfully.”