Coventry Building Society to close £780m Co-op Bank deal in the next few days

The Coventry Building Society is hurrying to finalise a £780m takeover of the Manchester-based Co-operative Bank, a move that will create a group with a balance sheet of £89bn.

Sky News has reported that the Coventry aims to complete the deal within the next few days to avoid complications from the UK Takeover Code.

Sources say both parties want to avoid the extra financial and regulatory issues that could arise if the deal falls under the code’s jurisdiction.

Coventry and the Co-operative Bank hope to resolve the remaining issues, including some balance sheet provisions, in the coming days.

They have been in talks for months, and in April, they announced they had signed non-binding heads of terms.

The deal would create a combined group with around five million clients, more than 110 branches and a mortgage portfolio of around £70m.

Coventry Building Society, the UK’s third-largest, will not allow its 2m members to vote on the Co-operative Bank takeover, similar to Nationwide’s decision to deny its 17m members a vote on its proposed £3bn acquisition of Virgin Money.

The combined Coventry and Co-operative Bank would be about the same size as Virgin Money, with roughly 5m customers across the UK and would enhance Coventry’s presence in the personal current account and business banking markets.

In 2013, the Co-operative Bank’s attempt to acquire the branch network that later became TSB collapsed amid its own crisis. The bank, then part of the broader Co-op Group, secured a £1.5bn rescue from American hedge funds.

The bank required another investor bailout in 2017, resulting in Bain Capital Credit and JC Flowers taking a 10% stake.

In late 2021, the Co-operative Bank approached TSB for a merger, but talks did not progress.

PJT Partners and Fenchurch Advisory Partners are advising the Co-operative Bank on its sale, while JP Morgan and KPMG are advising Coventry.