Coventry Building Society has announced its takeover plan of the Co-operative Bank in a deal worth an estimated £780million.
The two financial organisations reached an agreement earlier today after three months of reported exclusive talks.
If the deal is completed, Co-operative Bank would effectively be remutualised with the combined banking group having £90billion in assets.
City sources told Sky News that Coventry is not keen to offer building society members a vote because of the impact it would have on the takeover deal’s timetable and the likely uncertainty.
This comes shortly after the controversy which arose following Nationwide Building Society’s proposed £3billion acquisition of Virgin Money.
Nationwide refused to offer its 17 million members a vote on whether its own takeover plan should be implemented.
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The combined banking group will have five million customers
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Steve Hughes, chief executive officer of Coventry Building Society, said: “This is an exciting moment for the society.
“We have a very successful history, and we believe this could be the basis of a very successful future – with membership, great value and great service at its heart.
“The Co-operative Bank is a financially stable, profitable organisation with a shared heritage and products and services that complement our own.
“Its customers, colleagues, branches, mortgages and savings balances, and the additional products and services it provides, will make us stronger and enable us to continue offering the value and service that matters to members and customers alike.
“We’re confident that we have the people, capability and the financial strength to bring both organisations together successfully over a number of years.”
In a joint statement, the financial institutions said the acquisition would continue to offer “strong member value” and enhance investment across services and branches.
Furthermore, they said they would “extend” Coventry Building Society’s current account product proposition to cater more to members’ needs.
The takeover deal would lead to an “enlarged, national branch footprint”, the announcement said.
Furthermore, Coventry will introduce a business savings and current account proposition if the deal is successful.
However, the statement has reiterated that neither party believes a member vote on the deal is “required”.
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Nationwide Building Society has announced a similar takeover deal of Virgin Money
NATIONWIDE BUILDING SOCIETY
The statement said: “In coming to this decision, the Board has been informed by members’ surveys and focus groups which clearly signalled their priorities are maintaining our value proposition and service quality.
“In addition, the Society has consulted with a number of other stakeholders in recent weeks including regulators and certain ratings agencies to inform its evaluation of a Potential Transaction.”
The building society said the cash consideration needed to pay for the takeover will be paid for with existing cash resources.
Out of the £780million proposed as part of the deal, up to £125million will be deferred for three years subject to the future performance of the bank.
