Co-op Bank agrees to a potential £780m takeover by Coventry Building Society
- Group announced ‘exclusive’ takeover talks in March during Co-op’s strategic review
- The combined group would boast a balance sheet of £89 billion and expand CBS’ offering
The Co-operative Bank is expected to return to cross-ownership after agreeing a potential £780 million takeover by Coventry Building Society on Thursday.
The combined group is expected to have a balance sheet of £89bn, while offering customers – who would eventually become members – an “expanded range of products and propositions”, the pair said in a joint statement.
Coventry said the deal, if it received support from members and the regulator, would deliver a business savings and current account proposition as well as an “enlarged, national brand footprint”.
It would also give Coventry an established position in the personal current account market, ‘expanding the society’s product offering to meet the daily needs of more members’.
Co-op Bank will return to cross-ownership if a deal with Coventry Building Society is approved by members and the regulator
Coventry boss Steve Hughes said: ‘The Co-operative Bank is a financially stable, profitable organization with a shared heritage and products and services that complement ours.
“Its customers, colleagues, branches, mortgages and savings, and the additional products and services it provides, will make us stronger and enable us to continue to provide the value and service that matters to members and customers.
‘We are convinced that we have the people, the assets and the financial strength to successfully bring both organizations together in a number of years.’
The pair’s statement noted that the £780m cash consideration ‘excludes capital above certain thresholds at completion’, with up to £125m deferred for a period of three years depending on future performance.
Talks about a possible combination of the two groups emerged in March after Co-op launched a strategic review amid rumors it was on the brink of takeover by specialist lenders Shawbrook, Aldermore and Paragon Banking Group.
Co-op Bank plans to cut 400 jobs this year as it aims to “simplify and transform the business” but said this would have no impact on the number of branches.
The company has more than quadrupled its profits in 2022 to £132.6 million thanks to higher rates.
It marked a major turnaround for the lender, which was on the brink of collapse before being rescued by a group of US hedge funds in 2017.
But profits fell in the nine months to the end of September following the acquisition of Sainsbury’s mortgage portfolio, made up of around 3,500 customers and £500 million in balances.
Hughes added: “This is an exciting moment for the Society. We have a very successful history and we believe this can be the foundation for a very successful future – centered around membership, great value and great service.”