Banking update issued to 2.6million Brits as major takeover deal gets green light
An update has been given to over 2.6million Co-operative Bank customers as a major takeover deal has been approved today.
In an update issued to the London Stock Exchange today, the Financial Conduct Authority (FCA) and Bank of England’s Prudential Regulation Authority have given the green light for the Coventry Building Society's acquisition of Co-operative Bank. The takeover is set to be completed by January 1, 2025.
Coventry will pay £780million for the bank, with up to £125million deferred for up to three years subject to Co-op Bank's performance. The deal was agreed earlier this year in May and faced major criticism for not putting it forward for a vote among its two million members.
Under the deal, Co-op Bank will become a subsidiary of Coventry, and each one will retain its own banking licence. This means customers and building society members meaning customers and members of each organisation will continue to have the same Financial Services Compensation Scheme protection. Coventry has said it intends to gradually integrate Co-op Bank over several years.
In a statement, Coventry says the acquisition will "not require any immediate changes to the capital structure of the Bank or the combined group as a whole." It adds that post completion, "the Society and the Bank intend to simplify and align their capital structures over time."
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Coventry Building Society is one of the UK's largest mortgage providers, managing about £50billion worth of mortgages and £48million worth of savings. Through the deal, it will gain around 2.6 million personal current account and business banking customers, alongside 93,000 small and medium-sized businesses. Co-Op Bank also has 50 banking branches in the UK.
This move signifies a return to a mutual structure for Co-op Bank, meaning it will be owned by individual members rather than shareholders and investors. Over a decade ago, the 152-year-old lender was part of the wider Co-op Group before it broke away due to severe financial difficulties. The bank was saved in 2013 by American hedge funds and is currently owned by a group of private equity investors.
In a statement released today, Steve Hughes, Chief Executive of Coventry Building Society, said he was pleased to have received regulatory approval for the deal. He said, "This is a huge milestone and means we expect to complete our purchase on January 1, 2025.
"As we look to the future, I’m excited about what’s to come. Bringing our two organisations together, we’ll use our combined experience of almost 300 years to grow our Society, but we’ll also continue to be the safe, secure and mutually owned building society that you trust." He added, "I firmly believe we’re all together, even better. Thank you for being a valued member of Coventry Building Society."
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