Co-operative Bank in exclusive merger talks with Coventry Building Society
- Co-op Bank launched a strategic review in a November trading update
- The lender has been the subject of a number of takeover bids
The Co-operative Bank is considering a merger with Coventry Building Society following a strategic review launched in November.
The lender, which has been the subject of a number of secret bids from potential buyers, today said it was in 'exclusive discussions' with Coventry Building Society to 'evaluate the benefits of a combination'.
Co-op launched a strategic review last month and was rumored to be on the verge of being taken over by specialist lenders Shawbrook, Aldermore and Paragon Banking Group.
The bank launched a strategic review last month
CEO Nick Slape said in March that rising interest rates could trigger a wave of mergers involving smaller banks – and suggested his own company could become a target.
Co-op Bank has more than quadrupled its 2022 profits to £132.6 million thanks to higher interest 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.
Co-op said at the time that the first portfolio acquisition in more than a decade “highlights the bank's turnaround and focus on both organic and inorganic opportunities.”
The group said: 'The bank confirms that, following receipt of non-binding proposals from potential buyers, it has entered into a period of exclusive discussions with Coventry Building Society.
'This period of exclusivity will enable the Association and the Bank to better assess the benefits of a combination.
'It is not certain that these exclusive discussions will lead to a transaction. A further update will be provided in due course.”
Coventry Building Society – Britain's second largest mutual – confirmed it had 'entered into an exclusivity agreement in relation to a potential bid for The Co-operative Bank'.
It added: 'A transaction will only be pursued if it has been determined by the association's board of directors to be in the best interests of current and future members.'