Coventry Building Society has finalized a £780 million deal to acquire rival lender Co-operative Bank and confirmed it will not give members voting rights.
The merger will create a giant bank with millions of customers and assets worth around £89 billion.
This means the Co-op Bank will return to the mutual structure. This means that it is owned by individual members rather than shareholders and investors like most UK banks.
The co-operative bank was part of a wider co-operative group more than 10 years ago, but fell into serious financial difficulties and was separated.
It was rescued by an American hedge fund and is now owned by a group of private equity investors.
It is expected to take several years for the two companies to fully join, and “there will inevitably be changes over time,” the two people said.
Both brands will remain on the high street for the period, but eventually Co-op Bank customers want to become members of the Coventry Society.
Coventry said it would benefit from having more customers, a wider range of financial products including mortgages and savings balances and current accounts, and more branches across the country.
I am confident that Coventry Building Society will be a great home for us.
Bob Dench, Chairman, Cooperative Bank
The building society confirmed on Friday that it had “carefully considered” whether to give members the opportunity to vote on the takeover but had “conclusively decided” that it would not be required.
“In making this decision, the Board of Coventry Building Society (CBS) took input from member surveys and focus groups, making it clear that their priority is maintaining our value proposition and quality of service,” the company said. said.
Co-op Bank chief executive Nick Slape said the deal was “a natural next step and presents an exciting opportunity”.
Chairman Bob Dench said: “I am very proud of everyone who has worked hard over many years to rebuild the bank. I am confident that Coventry Building Society will be a great home for us.”
Coventry manages around £50 billion worth of mortgages and £48 million worth of savings.
The co-operative bank has about 2.5 million retail and corporate customers and 50 branches across the country and is often known to have its own ethics policy, including ways to limit climate change.
This is not the only mega deal to grace the UK banking sector this year.
Nationwide Building Society is to acquire Virgin Money in a deal worth around £2.9 billion, which will create the UK's second largest savings and loan group.
Nationwide has faced some criticism for not voting on the planned acquisition with members, with a petition garnering thousands of signatures among members since the deal was announced.
The member-owned organization stood by its decision to proceed without a vote, saying building society rules did not require it to do so.