A HIGH street bank with millions of UK customers has agreed to be sold to a major rival in a new landmark deal.
The Co-operative Bank will be acquired by Coventry Building Society, pending regulatory approval.
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Coventry Building Society has agreed to pay £780million in cash for the bank.
Negotiations between the Co-operative Bank and Coventry have been ongoing for over three months before the deal was struck this afternoon.
The acquisition has effectively restored the Co-operative Bank's mutual status and will create a financial powerhouse boasting assets of £89billion.
Steve Hughes, chief executive officer of Coventry Building Society, said: "This is an exciting moment for the society.
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"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."
Talks of the potential merger have been ongoing since December 2023.
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Co-opBanktold investors, at the time, that it had begun "exclusive discussions" with the building society in order to "evaluate the merits of a combination" of the firms.
It follows speculation last year over a string of potential bidders for the lender, which has turned around its financial performance and recovered its profits.
High street bank SOLD to rival in £2.9billion deal – what it means for your money
Potential bidders for the group were thought to, at one stage, include specialist lenders Shawbrook and Aldermore.
With its origins dating back to 1872, Co-op Bank currently provides banking services to about 2.6 million retail customers and more than 93,000 small and medium-sized enterprises.
Meanwhile, Coventry manages nearly £50billion worth of mortgages and more than £45billion in savings balances.
Last month, TheCo-operativeBankannounced plans to cut around one in 10 of its workforce, shedding approximately 400 jobs, in a bid to cut costs.
Thebankis no longer part of the widerCo-operativeGroup after parting ways in 2017 when it fell into deep financial difficulty.
The bank has been owned by a group of private equity investors, including US-based JC Flowers and Bain Capital Credit, who bought a stake in 2021.
A tie-up with Coventry Building Society should return it to a member ownership structure.
The once-flailingbankbecame profitable two years ago and more than quadrupled profits in 2022, under the leadership of chief executive Nick Slape who steered its turnaround.
It comes after Co-opBankagreed to buy Sainsbury'sBank’smortgage portfolio in August 2023 for £464million, taking on its approximately 3,500 customers.
WHAT WILL HAPPEN TO CUSTOMERS?
The move will affect millions of credit cards, loans and savingscustomers.
However, it's important to note that if the acquisition goes ahead, customers will not experience any immediate change.
Deposits will not change, and savings up to £85,000 will remain protected by the Financial Services Compensation Scheme (FSCS).
Any strategic changes for the company will likely be communicated directly to customers once the deal goes through.
YEARS OF TROUBLE
Hedge funds, including GoldenTree Asset Management and BlueMountain Capital, took control of Co-op Bank from its previous owner, the Co-operative Group, through a restructuring process in back in 2017.
The bank last explored a sale to Cerberus Capital Management in 2020, but talks ultimately broke down, according to media reports at that time.
BlueMountain subsequently sold a minority stake in the group to private equity houses JC Flowers & Co and Bain Capital in 2021.
Later that year, Co-op Bank made an offer for domestic rival TSB Group, which Spanish parent Banco Sabadell rejected
Bankers have long expected consolidation among the UK's mid-sized lenders to help them compete more effectively with larger players like NatWest and Barclays, but few deals have been made.
RECENT ACQUISITIONS
Last month, Virgin Money agreed to a takeover by Nationwide Building Society in a £2.9billion deal.
Nationwidesaid the merger would enable the company to provide members with a wider range of products and services.
The takeover has brought together Britain's fifth and sixth-largestretaillenders, creating a combined group with nearly 700 branches.
The two brands will initially operate under their separate names and be re-branded within six years.
In February we saw a similar deal made between Barclays and Tesco Bank.
Tesco Bank, which has over five million customers, was sold to Barclays in an agreed-upon deal that included acquiring almost 3,000 staff.
It comes afterSainsbury's announced it will wind down its banking division, Sainsbury's Bank, as part of plans to focus onretail.
Lastsummer,Sainsbury's Bank offloaded its £479million mortgage book toCo-opBank.
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Elsewhere, strugglingMetro Bank announced it would axe 800 jobsand review its opening hours in a new cost-cutting drive.
Thehigh street bankhas also cut its seven-day branch opening hours as it attempts toclaw back costs.
