Coventry Building Society and Co-op Bank agree takeover terms

Coventry Building Society has agreed terms to buy Co-op Bank in a deal worth £780m



Coventry Building Society has agreed a potential takeover of The Co-operative Bank in a deal worth up to £780m.

The building society confirmed that it had reached an agreement on the key commercial terms with the bank’s owners.

The acquisition, which would see the building society take on the bank’s three million customers, would make it the UK’s seventh largest lender with assets of around £89bn.

The deal is subject to the two firms agreeing a contract and gaining approval from financial services regulators.

Coventry Building Society said the Co-op Bank would be integrated gradually over several years.

The deal would mean the return of the bank under a mutual ownership structure, which it last had more than 10 years ago when it was part of the wider Co-op Group.

It left the group in 2017 when it fell into financial difficulties before being rescued by American hedge funds and is now owned by a group of private equity investors.

Steve Hughes, chief executive of Coventry Building Society, described it as an exciting moment.

“We’ve spent a lot of time evaluating this opportunity and believe it’s the right thing to do,” he said in a letter to customers.

The lenders said they were working together to firm up the arrangements of the deal and stressed there can be no certainty that an acquisition will happen.

The two firms will retain their current names and branding while they work to finalise the deal.

Co-op Bank has 50 branches across the UK with about 3,400 staff. In March, it said it was planning to cut about 400 jobs as part of efforts to cut costs.

I fail to see how ordinary members benefit from this takeover?

Coventry Building Society swimming with 'sharks' as it refuses to reveal why £780m bid for Co-op Bank won't go to member vote



Coventry Building Society has said it is swimming with 'sharks' as it refuses to reveal why its £780 million bid for Co-op Bank won't go to a member vote.

The mutual is under growing pressure to give members a say in the takeover, which would make it Britain's seventh largest lender with £89 billion of assets.

Coventry's larger rival Nationwide Building Society is also holding out against calls to allow its 16 million members a role in deciding if it should buy Virgin Money in a deal that would create the biggest savings and loans group after Lloyds Bank.

Both mutuals have cited the Building Societies Act for not giving members a vote.

The Act says a member poll is required if the deal price is more than 15 per cent of a society's funds – a measure of financial strength – and if interest and fees from home loans are less than half the income of the bank being bought.

Coventry, which is more than twice the size of its target in terms of assets, declined to say if both measures were met. Co-op Bank said it did not provide an income breakdown.

At its annual meeting last week Coventry members questioned why Co-op Bank's American hedge fund owners, who rescued the lender from collapse in 2013, were selling now.

In response to a question as to whether Coventry was diving into shark-infested waters, deputy chair Jo Kenrick referred to the bank's owners as 'sharks' and Coventry as 'nice folk getting in with them'.

But she insisted the society had done its due diligence and the bank was no longer 'as broken as it was'.

The Co-op Bank has returned to profit after a near-death experience nearly 11 years ago when a £1.5 billion black hole opened up in its accounts and its chairman was filmed buying Class A drugs.

Coventry members pushed back at the board's suggestion that the Co-op deal was too complicated for some of them to understand.

'People are not fools,' said one, adding that they have 'enough intelligence' to vote on the matter.

I hope the due diligence carried out by CBS is more robust than the due diligence carried out by CCC over some of its ventures.

Building society buys Co-op Bank for £780m



Coventry Building Society has finalised its £780m deal to buy the Co-operative Bank, but will not be giving its members a vote.

The purchase is subject to approval from financial regulators, but is expected to be complete in early 2025.

The financial institutions combined will have millions of customers and about £89bn worth of assets.

Both organisations will continue to operate under their current names and branding while they are integrated, which is expected to take several years.

The deal means Co-op Bank will return to a mutual structure, where it is owned by individual members rather than shareholders and investors like most UK banks.

Co-op Bank was part of the wider Co-op Group more than 10 years ago, before splintering off when it fell into deep financial difficulty.

It was rescued by American hedge funds and is currently owned by a group of private equity investors.
'More customers'

Both brands will stay on the high street during the time it takes to join them together, but said there will "inevitably be change over time."

Eventually they want Co-op Bank customers to become Coventry society members.

Coventry Building Society said it would benefit from having more customers, mortgage and savings balances, a wider set of finance products including current accounts, and more branches spread across the country.

It said it "considered carefully" whether to give its members the chance to vote over the acquisition, but had "conclusively determined" that it was not required.

In other words "F*ck 'em!"