Coventry Building Society to acquire Co-operative Bank for £780m


In a significant move within the UK banking sector, Coventry Building Society (CBS) has announced its acquisition of Co-operative Bank for a total of £780 million in an all-cash transaction. This strategic purchase includes major shareholders who collectively hold nearly 88% of the A shares and 100% of the B shares of the London Stock Exchange-listed Co-operative Bank.

Acquisition Details and Financial Terms

Under the terms of the acquisition, Coventry Building Society will pay up to £125 million of the total consideration deferred over a three-year period, contingent on the future performance of Co-operative Bank as specified in the share purchase agreement (SPA). This approach underscores the society’s confidence in the bank’s continuing profitability and strategic value.

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Strategic Enhancements and Future Prospects

This acquisition marks a significant expansion for Coventry Building Society, which had mortgage balances totaling £50.3 billion at the end of the previous year. The society aims to leverage this acquisition to bolster its footprint in the mortgages and savings market while introducing new services, including a business banking proposition. The combined entity will have a pro forma balance sheet of £89 billion as of December 31, 2023.

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Impact on Services and Market Position

Coventry Building Society’s CEO, Steve Hughes, expressed enthusiasm about the merger’s potential to enhance service offerings: “By bringing together Coventry Building Society and The Co-operative Bank we will be able to deliver more value to more people in the coming years. This union augments our capabilities to maintain the exceptional service our members value.”

Legal and Regulatory Framework

The acquisition process is supported by Addleshaw Goddard serving as the legal adviser for Coventry Building Society, with Freshfields Bruckhaus Deringer and Paul Hastings (Europe) advising Co-operative Bank and the sellers, respectively. The completion of this transaction is subject to approvals from the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA), anticipated by Q1 2025.

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Market and Economic Implications

The merger is poised to significantly enhance Coventry Building Society’s national presence, expanding its branch network and introducing comprehensive financial solutions across the UK. This strategic acquisition is expected to improve efficiencies and provide a broader range of financial products and services to a larger customer base.

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