Coventry Building Society confirms purchase of Co-op Bank in mega-deal

Coventry Building Society has finalised its £780 million deal to buy rival lender the Co-operative Bank, and confirmed it will not be giving its members a vote.

The tie-up will create a banking giant with millions of customers and about £89 billion worth of assets.

It means Co-op Bank will return to a mutual structure, meaning 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.

Fully joining up the two businesses is set to take several years, and there will “inevitably be change over time”, the pair said.

Both brands will stay on the high street during that period, but they eventually want Co-op Bank customers to become Coventry society members.

Coventry said it will 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.

The building society confirmed on Friday that 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 coming to this decision, the CBS (Coventry Building Society) board has been informed by member surveys and focus groups which clearly signalled their priorities as maintaining our value proposition and service quality,” the business said.

Nick Slape, Co-op Bank’s chief executive, said the deal was a “natural next step and presents an exciting opportunity”.

Its chairman, Bob Dench, said: “I am very proud of all those who have worked so hard over so many years to rebuild the bank. I am sure the Coventry Building Society will prove to be a very good home for us.”

Coventry manages about £50 billion worth of mortgages and £48 million worth of savings.

Co-op Bank has about 2.5 million retail and business customers, and 50 branches across the country, and is often known for having its own ethical policy, including how it limits climate change.

It is not the only mega-deal to grace the UK’s banking sector this year.

Nationwide Building Society is set to take over Virgin Money in a deal worth about £2.9 billion, which would create Britain’s second-biggest savings and loans group.

Nationwide has faced some criticism for not giving its members a vote over the planned acquisition, with a petition amongst members gaining thousands of signatures since the deal was announced.

The member-owned organisation has stood by its decision to forge ahead without a vote, saying it is not required to do so under building society rules.