- Group revealed ‘exclusive’ takeover talks in March amid Co-op strategic review
- The combined group would have a balance sheet of £89bn and would expand CBS’ offering
The Co-operative Bank will return to mutual ownership after it agreed on Thursday to a potential £780m takeover by Coventry Building Society.
The combined group will 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 backed by members and the regulator, would give it a business savings and current account proposition as well as an “expanded national brand footprint”.
It would also give Coventry an established position in the personal current account market, “thus broadening the society’s product proposition to meet the daily needs of more members”.
Co-op Bank to return to mutual ownership if members and regulator approve deal with Coventry Building Society
Coventry boss Steve Hughes said: ‘The Co-operative Bank is a financially stable and profitable organization with a shared heritage and products and services that complement our own.
‘Your customers, colleagues, branches, mortgage and savings balances, and the additional products and services you offer, will make us stronger and enable us to continue delivering the value and service that matters to members and customers alike.
“We are confident that we have the personnel, capacity and financial strength to bring both organizations together successfully for several years.”
The couple’s statement noted that the cash consideration of £780m “excludes equity exceeding certain thresholds at the time of completion”, with up to £125m deferred for a period of three years subject to 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 verge of being acquired by specialist lenders including Shawbrook, Aldermore and Paragon Banking Group.
Co-op Bank plans to cut 400 jobs this year as it looks to “simplify and transform the business”, but said this would not have an impact on branch numbers.
It 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 verge of collapse before being rescued by a group of US hedge funds in 2017.
But it suffered a drop in profits in the nine months to the end of September after acquiring Sainsbury’s mortgage portfolio made up of around 3,500 customers and £500m in balances.
Hughes added: ‘This is an exciting time for the Society. We have a very successful history and we believe this could be the foundation of a very successful future, focused on membership, great value and great service.’