Merger to create £70bn super mutual

A £70bn ‘super-mutual’ has been created following the merger of two of the UK’s biggest customer-owned financial services businesses.

After months of discussions, Co-operative Financial Services and Britannia Building Society are merging to create a giant with more than 12,000 employees and 300 branches.

The new organisation will be run by current Britannia chief executive Neville Richardson, while CFS chief David Anderson will leave the business which will be wholly-owned subsidiary of the Co-operative Group. However, the two companies will continue trade under the Britannia and CFS brands.

The merger is expected to save around £60m a year in costs which will be passed on to customers through more competitive rates and increased member dividends.

The group said there will be some compulsory redundancies over the three year integration period, but it is hoped they will be kept to a minimum. There will be no compulsory redundancies among branch staff.

Details of the merger will be sent to members who will vote on the proposal at a meeting on April 29. However because Britannia has joined forces with a mutual there will be no windfall payment for members.

A  new law – known as the Butterfill Act – is due to come into force in March that will make it possible for different types of mutuals – building societies, co-operatives and friendly societies – to join forces. At present, there is no legislation in place to allow this to happen.

Mr Richardson said: “This proposed merger offers a unique opportunity to create a new force in British financial services – strongly capitalised and with the scale to offer customers a full range of products and services that are ethical, mutual and co-operative.

“Britannia members have an historic opportunity to help create a new way of doing business in British financial services by voting to bring together two leading customer-owned businesses with unrivalled reputations for social responsibility, customer satisfaction, employee engagement and member democracy. They can choose to be part of something good.’

Mr Anderson said: “The co-operative and mutual movements have never been more relevant.

“Owing to the damage done by the credit crunch, people have been crying out for a new way of doing business with a financial organisation of substance that truly has their interests at heart – this merger will create that organisation and we’d hope to attract many thousands of new customers as a result.”

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