The Co-operative Bank is set to return to mutual ownership after it agreed a potential £780million takeover by Coventry Building Society on Thursday.
The combined group is set to boast a balance sheet of £89billion, while providing customers – who would eventually become members – with an ‘enlarged range of products and propositions’, the pair said in a joint statement.
Coventry said the deal, should it receive backing from members and the regulator, would give it 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, thereby ‘extending the society’s product proposition to meet more of members’ daily needs’.
Co-op Bank is set to return to mutual 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 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’re confident that we have the people, capability and the financial strength to bring both organisations together successfully over a number of years.’
The pair’s statement noted the £780million cash consideration ‘excludes capital in excess of certain thresholds at completion’, with up to £125million deferred for a period of three years subject to the future performance.
Talk of a potential combination of the two groups emerged in March after Co-op launched a strategic review, amid rumours it was verge of being taken over by the likes of specialist lenders Shawbrook, Aldermore and Paragon Banking Group.
Co-op Bank is planning to cut 400 jobs this year as its seeks to ‘simplify and transform the business,’ but said this would not have an impact on branch numbers.
It more than quadrupled its profit in 2022 to £132.6million on the back of 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 it suffered a dip in profit during the nine months to the end of September after acquiring Sainsbury’s mortgage portfolio comprised of approximately 3,500 customers and £500million of balances.
Hughes added: ‘This is an exciting moment for the Society. We have a very successful history, and we believe this could be the basis of a very successful future – with membership, great value and great service at its heart.’
