Coventry Building Society is racing to finalize a £780m takeover of the Co-operative Bank, which would catapult the mutual into the ranks of Britain’s biggest high street lenders.
Sky News has learned that Coventry is trying to put the finishing touches on a definitive agreement in the coming days to avoid it falling under the auspices of the UK Takeover Code.
Sources said both sides were keen to avoid additional financial and regulatory complexities that could arise if the transaction became subject to the code.
Coventry and the Co-operative Bank were now hopeful of resolving residual issues, including in relation to a number of balance sheet provisions, in the coming days.
Negotiations have been ongoing between them for months, with the announcement in April that they had signed non-binding terms.
If completed, the deal will effectively remutualize the Cooperative Bank more than a decade after it came close to collapse and was rescued by American hedge funds.
The partnership will create an organization with millions of customers and around £90 billion in assets.
Britain’s third-largest building society, however, will not offer its 2 million members a vote on the Co-operative Bank takeover, in line with Nationwide’s decision to refuse its 17 million members a say about its proposed acquisition of Virgin Money for £3 billion.
Coincidentally, the combined Coventry and Co-operative Bank would be comparable in size to an independent Virgin Money, with around 5 million customers across Britain.
Combining the organizations would give Coventry a major boost in the personal current account and business banking markets.
In 2013, the Co-operative Bank’s bid to acquire the branch network that became TSB fell into disarray as the scale of its own crisis emerged.
At the time, it was part of the wider Co-op Group, but was forced to turn to American hedge funds to secure a £1.5 billion bailout, even as its former chairman, Paul Flowers, was left humiliated by the revelations. from the tabloids about his private activities. life.
The creditor then needed a new rescue from investors in 2017, with two large investors – Bain Capital Credit and JC Flowers – subsequently acquiring a 10% stake in the company.
In autumn 2021, Banco Cooperative approached Spanish-owned TSB about a merger, but negotiations did not progress.
PJT Partners and Fenchurch Advisory Partners are advising Banco Cooperativo in its sale negotiations.
JP Morgan and KPMG are advising Coventry.
Coventry and the Co-operative Bank declined to comment.
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