Coventry Building Society’s £780million takeover of the Co-operative Bank has received regulatory approval, with the deal set to complete on January 1, 2025.
The Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) have given the green light for Co-op Bank to become a subsidiary of Coventry Building Society.
The merger, which was first announced in May, will create a significant new force in British banking with combined assets of approximately £89billion.
The deal marks a significant shift for Co-op Bank, returning it to a mutual structure, meaning it will be owned by individual members rather than shareholders and investors.
This transformation represents one of the most substantial changes in British banking this year, as the sector continues to see significant consolidation.
Coventry Building Society currently manages approximately £50billion in mortgages and £48million in savings accounts.
The merger will significantly expand its reach, with Co-op Bank bringing 2.5 million retail and business customers and 50 branches across the country.
Co-op Bank is known for its ethical policy, including its commitment to limiting climate change.
According to Coventry Building Society, the merger between the firms will provide benefits through increased customer numbers, expanded mortgage and savings balances, and a broader range of financial products including current accounts.
The integration will also give Coventry a wider geographical presence through an expanded branch network.
The Co-op Bank’s journey to this merger follows a turbulent period in its history. Over a decade ago, the bank was part of the wider Co-op Group before encountering severe financial difficulties.
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Coventry Building Society is taking over the Co-Op BankCOVENTRY BUILDING SOCIETYThis crisis led to the bank splitting from the Co-op Group. In response to these financial troubles, American hedge funds stepped in to rescue the institution.
Since then, the bank has been under the ownership of a group of private equity investors.
The upcoming merger with Coventry Building Society represents a new chapter, though both lenders have acknowledged that fully integrating the businesses will take several years.
They have noted that “there will inevitably be change over time” as the two organisations come together.
Both the Co-op Bank and Coventry Building Society brands will remain visible on the high street during the initial integration period.
However, the long-term plan involves Co-op Bank customers becoming members of the Coventry Building Society.
The transition will maintain continuity for existing customers while working towards full integration under the Coventry Building Society structure.
Both organisations have emphasised that changes will be implemented progressively over time.
The merger aims to combine the strengths of both institutions while maintaining their commitment to customer service during the transition period. This merger is not the only significant banking deal in the UK this year.
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Customers will be looking to see how the merger will impact them going forward
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In October, Nationwide Building Society acquired Virgin Money in a £2.9bn takeover, creating Britain’s second-largest savings and loans group.
The Nationwide-Virgin Money deal stands as the UK’s biggest banking merger since the financial crisis.
Nationwide has reported strong early results from the acquisition, gaining £2.3bn since the deal’s completion.
The building society has also noted that Virgin Money’s value now exceeds the original £2.8bn takeover price.