Coventry Building Society Bids £780m for Co-operative Bank: After four months of discussions, Coventry Building Society (CBC) may merge with Co-operative Bank for £780 million.
Yesterday (18 April), the building society agreed to the bank’s commercial terms.
Nationwide is the latest building society to strike a deal to acquire Virgin Money for 2.9 billion, while Barclays is buying Tesco Bank for £600 million.
As a result of the merger, the building society will become the seventh-largest provider in the UK, with a customer base of nearly five million and assets worth £89 billion.
If the deal is completed, it will create a new high-street challenger bank with almost 5 million customers and a balance sheet of £89 billion.
There are likely to be weeks of negotiations before a deal can be finalized, and both groups have stressed that a takeover is still “not certain at this stage”.
In making the “non-binding” offer, Coventry’s management and the bank’s hedge fund owners have deemed a deal in their best interests after three months of due diligence.
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Is the deal going to happen soon?
The Co-operative Bank tells MoneyWeek “there’s still work to do” on the CBS-Co-operative Bank deal. CBS says the deal isn’t guaranteed.
In April, both parties agreed on key terms, but they’re still hammering out the contract details and waiting for regulatory approval. Until a deal is finalized, both banks and building societies will continue to serve their customers separately.
CBS will take several years to fully integrate Co-operative Bank’s three million customers.
If the Co-op Bank deal is concluded, Simon Kent, global head of financial services at Kearney, said: “Coventry Building Society’s recent offer to acquire the Co-op Bank is a positive development for both parties. As a result, both parties gain further scale and are able to reach more customers.”
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In light of the fact that the deal has not yet been finalized, CBS has confirmed there will be no immediate changes for customers.
Currently, the Co-operative Bank offers its customers credit cards, savings accounts, mortgages, loans and insurance products. The building society said it couldn’t confirm which financial products would be shifted over in the merger at this point.
In spite of reports that the deal will include Co-operative Bank brands, the bank has not confirmed this. Britannia, Mortgage Agency Services Number Five (MAS Five), Sainsbury’s Bank mortgages, Smile, and The Co-op Bank for Intermediaries are among the brands.
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