Coventry Building Society seals £780m Co-op Bank deal

The £780m acquisition of Manchester-based Co-operative Bank by The Coventry Society will go ahead, creating a new powerhouse in the UK’s high street banking market.

Creating a group with a balance sheet of £89bn, the new entity will be led by David Thorburn and Steve Hughes, Coventry’s current chair and chief executive.

The Bank is set to return to mutual ownership when it becomes a subsidiary of Coventry and will continue to operate with a separate independent board post-completion.

Coventry says it will integrate the Bank gradually over several years, and during this period, both businesses will continue to operate under their current names and branding, while the work required to provide more integrated services in the future is carried out.

It was announced a few days ago that Coventry wanted to complete the deal within the next few days to avoid complications from the UK Takeover Code, with both parties wanting to avoid the extra financial and regulatory issues that could arise if the deal falls under the code’s jurisdiction.

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

Up to £125m will be deferred for three years, subject to the future performance of the Bank as it is integrated over several years. Coventry says it intends for eligible Bank customers to become Society members over a period of time post-completion.

Chairman of Coventry Building Society, David Thorburn said: “I believe this is a transformational moment for members and customers of the Society and The Co-operative Bank. We’re building on our shared heritage and creating a stronger mutual business that will deliver in the best interests of our current and future members.”

Chairman of The Co-operative Bank Holdings, Bob Dench said: “This transaction sees The Co-operative Bank returning to mutuality.  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.”

Law firm Addleshaw Goddard is acting as legal adviser to the Society in connection with the acquisition.