Coventry denies members vote on takeover

COVENTRY Building Society members will be denied a vote on the £780m takeover of Co-operative Bank.

The two lenders unveiled a preliminary agreement that will lead to the Co-operative becoming a mutual again 11 years after it lost society status. However, Coventry’s mutual members will have no say in the matter after the business declined to offer them a vote.

Coventry said the board had “considered carefully” whether a member vote was required, but decided one was “not required”. The group said: “In coming to this decision, the board has been informed by member surveys and focus groups which clearly signalled their priorities as maintaining our value proposition and service quality.”

Coventry, which has 2m members, is the UK’S second largest building society after Nationwide and competes against the likes of Yorkshire Building Society and Skipton Building Society.

The building society becomes the latest mutual to deny members a vote on a significant deal. Nationwide, another mutual society, has refused to give its membership base a vote on the £2.9bn takeover of Virgin Money despite mounting calls from some members. The Coventry deal means the Co-operative will return to its roots as a mutual after a turbulent period in private hands. The group was taken private in a debt for equity swap after the lender ran into financial problems in 2013.

The owners of the Co-op who will cash in on the deal include hedge fund JC Flowers and private equity firm Bain Capital.

Buying the Co-operative’s current accounts and small business lending will create a company with £89bn of assets.

Steve Hughes, the Coventry chief executive, said: “We have a very successful history, and we believe this could be the basis of a very successful future.”