Coventry Building Society (CBS) has secured regulatory approvals for its previously announced £780m acquisition of British retail and commercial bank Co-operative Bank.
The all-cash deal has received clearance from the UK Financial Conduct Authority (FCA) and the UK Prudential Regulation Authority (PRA). It is set to be completed on 1 January 2025.
Announced in May this year, the transaction will see Coventry Building Society acquiring 88% of the A shares and 100% of the B shares of the London Stock Exchange (LSE) listed Co-operative Bank from its major owners.
The acquisition will be funded entirely through Coventry Building Society’s existing cash reserves, requiring no immediate changes to the capital structure of either organisation.
A portion of the total cash consideration, amounting to up to £125m, will be deferred for three years following completion, contingent on the bank’s future performance and the conditions specified in the share purchase agreement (SPA).
Upon the completion of the deal, Co-operative Bank will become a subsidiary of Coventry Building Society, with both organisations retaining their separate banking licences.
Customers and members of both entities will continue to enjoy the same protection under the Financial Services Compensation Scheme (FSCS), said Coventry Building Society.
Based in England, Coventry Building Society has a mortgage balance valued at £50.3bn as of 2023. The savings and mortgage provider serves approximately two million members across the UK.
Coventry Building Society chief executive Steve Hughes said: “Bringing our two organisations together, we’ll use our combined experience of almost 300 years to grow our Society, but we’ll also continue to be the safe, secure and mutually owned building society that you trust.
“There will be no immediate change to our services – we have a lot of work to do to provide a joined-up service, which may take several years.”
Co-operative Bank offers banking services and products to nearly 2.5 million retail customers and approximately 94,000 small and medium-sized enterprises (SMEs). The bank is authorised and regulated by the PRA and additionally regulated by the FCA.
