Coventry Building Society has said it is swimming with “sharks” as it refuses to reveal why its £780m bid for Co-op Bank will not be put to a member vote.
The mutual is under increasing pressure to give its members a say in the takeover, which would make it Britain’s seventh-biggest lender with £89 billion in assets.
Coventry’s biggest rival, Nationwide Building Society, is also resisting calls to let its 16 million members be involved in deciding whether to buy Virgin Money in a deal that would create the biggest savings and loan group after Lloyds Bank. .
Both mutuals have cited the Building Societies Act for not giving voting rights to their members.
The law says a survey of members is required if the transaction price is more than 15 percent of a corporation’s funds – a measure of financial strength – and if interest and fees on mortgage loans are less than the half of the income of the bank being purchased.
Black hole: Co-op Bank is back in profit after a near-death experience almost 11 years ago
Coventry, which is more than twice the size of its target in terms of assets, declined to say whether both measures were met. Co-op Bank said it did not provide a breakdown of revenue.
At their annual meeting last week, Coventry members asked why the American owners of the Co-op Bank hedge funds, which rescued the lender from collapse in 2013, were now selling.
In response to a question about whether Coventry was wading into shark-infested waters, vice-chairman Jo Kenrick referred to the bank’s owners as “sharks” and Coventry as “good people who mess with them”.
But he insisted that the society had done its due diligence and the bank was no longer “as broke as it was.”
The Co-op Bank is back in profit after a near-death experience almost 11 years ago, when a £1.5bn black hole opened up in its accounts and its chairman was filmed buying Class A drugs.
Coventry members rejected the board’s suggestion that the Co-op agreement was too complicated for some of them to understand.
“People aren’t stupid,” one said, adding that they have “enough intelligence” to vote on the issue.
