Potential merger will result in a combined entity with £89 billion in assets
Coventry Building Society has made a £780 million offer to acquire the Co-operative Bank, marking another potential consolidation within the UK banking sector.
Coventry and Co-op have been discussing a potential acquisition since December, and, on Thursday, their boards confirmed that the proposed all-cash deal has reached the stage of non-binding terms, with both parties reportedly close to finalising definitive agreements.
It was pointed out that there is no guarantee that the deal will conclude as the transaction remains subject to regulatory approval. Should the acquisition proceed, up to £125 million of the purchase price could be deferred for three years, contingent on the performance of Co-operative Bank during that period.
The potential merger would result in a combined entity with a balance sheet totalling £89 billion as of the end of 2023.
The UK's Coventry Building Society agrees to buy Co-Op Bank for £780 million, the latest sign of consolidation among British lenders https://t.co/SHmQwRN5GX
— Bloomberg (@business) April 18, 2024
Although full integration of the two banks is expected to span several years, the potential takeover of Co-operative Bank by Coventry Building Society – the latest consolidation effort in the UK retail banking sector following Nationwide Building Society’s announcement last month of its agreement to purchase Virgin Money for £2.9 billion – would expand Coventry’s branch network and enhance its range of financial products.
“This is an exciting moment for the Society,” said Steve Hughes (pictured), chief executive of Coventry Building 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.
“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.”
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