Co-op Bank and Coventry Building Society in exclusive talks over possible merger
Co-op Bank told investors it had begun discussions with the building society in order to ‘evaluate the merits of a combination’.
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Your support makes all the difference.The Co-operative Bank and Coventry Building Society have entered into talks over a possible merger of the two high street lenders.
Co-op Bank told investors it had begun “exclusive discussions” with the building society in order to “evaluate the merits of a combination” of the firms.
It follows speculation this year over a string of potential bidders for the lender which has turned around its financial performance and recovered its profits.
Potential bidders for the group were thought to at one stage include specialist lenders Shawbrook and Aldermore.
The bank is longer part of the wider Co-operative Group after parting ways in 2017 when it fell into deep financial difficulty.
It is now owned by a group of private equity investors including US-based JC Flowers and Bain Capital Credit who bought a stake in 2021.
The bank, which has about 2.5 million retail customers and says it is the UK’s leading ethical bank, said last month it was “exploring potential strategic opportunities” following its recovery and growth over the past three years.
A tie-up with Coventry Building Society could return it to a member ownership structure.
The once-flailing bank became profitable two years ago and more than quadrupled profits in 2022, under the leadership of chief executive Nick Slape who steered its turnaround.
It reported a pre-tax profit of about £80 million for the third quarter of the year, down by a fifth compared with the previous year.
Co-op Bank agreed to buy Sainsbury’s Bank’s mortgage portfolio in August for £464 million, taking on its approximately 3,500 customers.
There is no certainty that these exclusive discussions will result in a transaction
Meanwhile, Coventry manages nearly £50 billion worth of mortgages, and more than £45 billion in savings balances.
Higher UK interest rates helped drive its profits higher this year, despite the lender saying it has paid out higher rates to savers than the market average.
Coventry said a deal would only take place “if it is determined by the society’s board to be in the best interests of current and future members”.
“There is no certainty that these exclusive discussions will result in a transaction,” Co-op Bank added.