Coventry Building Society and Co-op Bank agree terms over potential £780m acquisition deal
Coventry Building Society has agreed “non-binding heads of terms” over the potential acquisition of The Co-operative Bank in a deal worth around £780 million.
Coventry Building Society agrees £780m deal for The Co-operative Bank
The news comes off the back of reports circulating last December that the building society was in talks with the bank about a possible takeover.
The prospective transaction, which the two firms say is “well advanced” in a joint statement, will be financed through Coventry Building Society’s current cash reserves.
Alongside the cash sum offered, Coventry Building Society plans to allocate an additional payment of up to £125 million which will be deferred for the next three years and is contingent upon the bank’s future performance.
The two companies add that the potential deal is still subject to regulatory and customary closing approvals and “there can be no certainty at this stage” that the deal will go through.
Coventry Building Society says the proposed move is poised to strengthen the “enlarged group’s existing presence in mortgages and savings”, with the firm planning to “integrate the bank gradually over several years”.
The proposed merger is expected to create a combined group with a pro forma balance sheet of £89 billion, reflecting the financial positions of both entities as of 31 December 2023.
In a statement posted on the company’s website regarding the deal, Stephen Hughes, CEO of Coventry Building Society, asserts that while the building society “may be three times larger” than the Manchester-based bank, its “customers, colleagues, branches, mortgages and savings balances, along with the additional products and services it provides such as its business proposition, will make us stronger”.
“There is a lot still to do and no guarantee that the deal will happen. Our next step is to agree the contractual terms and gain regulatory approval,” Hughes adds.
Founded in 1872, The Co-operative Bank offers a range of financial products, including savings accounts, mortgages, and credit cards, and currently boasts a workforce of over 3,000 staff.
