Merger proposal

Co-op Bank mutual return on cards in Coventry talks

Co-op bank
Co-op Bank may regain its mutual status (photo by Terry Murden)

Co-op Bank is in talks with Coventry Building Society about a merger that would see it return to mutual ownership.

A deal with Britain’s second biggest building society would create a group with almost five million customers, bringing together Co-op Bank’s 2.5m customers and Coventry’s 2m members.

The 151-year-old bank came close to collapse in 2013 with the discovery of a £1.5billion black hole in its finances after a troubled merger with building society Britannia in 2009. 

It split from the Co-operative Group, which retained a 20 per cent stake until 2017, and was bailed out by hedge funds.

Its current owners are Silver Point Capital, Golden Tree, Anchorage Capital, JC Flowers, Bain Capital Credit, Cyrus Capital and Invesco.

The bank became profitable again two years ago and more than quadrupled profits in 2022, under chief executive Nick Slape. Aldermore Bank and Shawbrook Group were this year rumoured to be considering bids.

The bank has been the target of offers since at least 2020, when it was approached by US private equity firm Cerberus. 

AJ Bell investment director Russ Mould said a deal would be ‘a welcome return to calmer waters after a difficult decade’.

Co-op Bank bought Edinburgh-based Sainsbury’s Bank’s mortgage book in August for £464million, taking on about 3,500 customers, while Coventry manages nearly £50billion worth of mortgages, and more than £45bn of savings. 

Co-op Bank said: “This period of exclusivity will enable the society and the bank to better evaluate the merits of a combination.

“There is no certainty that these exclusive discussions will result in a transaction. A further update will be provided in due course.”

Coventry said a deal would only take place “if it is determined by the society’s board to be in the best interests of current and future members”.

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