Target: Co-op quadrupled its profit
The head of the Co-operative Bank has said rising interest rates could spark a wave of mergers involving smaller banks – and admitted his own firm may become a target.
Nick Slape said rising rates, which tend to boost profits of lenders as they charge borrowers more, could be a ‘catalyst’ for consolidation.
Slape said there was ‘nothing to see’ for now on the Co-op becoming a target. But he added: ‘It goes with progress. If the bank is progressing and performance is better, somebody might want to look at us.’
He said he was ‘not aware’ of potential suitors sizing up his firm.
Slape was speaking after the bank reported more than quadrupling profit in 2022 to £132.6 million, from £31.1 million a year earlier.
It marks 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. ‘For some years now people have talked about consolidation in the mid-tier sector. It hasn’t come,’ Slape said. But the rapid increase in interest rates from 0.1 per cent to 4 per cent ‘could be a catalyst for that sort of thing’, he added.
‘I’ve not seen anything yet,’ he continued. ‘We’ll look at things and run the ruler over it, do the maths like everyone else does, but we’re not involved in any conversations.’
In 2020, the Co-op was reported to have received a takeover approach from US private equity firm Cerberus – but talks went nowhere.
A year later its own offer to buy rival TSB for a reported £1 billion was rejected by TSB’s Spanish owner Sabadell.
Then, last month, it was reported the Co-op Bank had tabled an offer for a £650 million loan portfolio being offloaded by rival Sainsbury’s Bank. The Co-op has not commented on that report.
Some banks have been criticised for being ‘ungenerous’ with the interest they offer savers, as they rapidly raise borrowing rates in response to Bank of England moves. But Slape defended his firm’s record saying it was passing on higher rates to all customers including those on accounts no longer available to new savers.
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