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The UK’s third largest building society by assets has submitted a bid for Co-op Bank, in a deal that would return the private equity-owned lender to mutual ownership, according to people familiar with the talks.
Coventry Building Society has made a non-binding offer for Co-op Bank that values the lender at more than £700mn, one of the people said. A deal would result in the merged group with about £90bn in assets.
Sky News first reported the Coventry bid.
Coventry, which has about 2mn members across the UK, said: “We remain open to opportunities that may boost the value and services we offer to our current and future members, but we don’t comment on any public speculation.” Co-op Bank declined to comment.
The Co-op Bank kicked off an auction process earlier this year and said last month that it was “exploring potential strategic opportunities, the assessment of which is currently at a preliminary stage”.
The UK high street lender had attracted interest from other suitors, including specialist lender Shawbrook and consumer credit group NewDay, one person familiar with the talks said. Shawbrook’s cash and equity offer valued the Co-op bank at about £600mn, while Aldermore, another lender, also entered talks with the bank before withdrawing from the process, the person added.
The Co-op Bank, which is backed by US-based investors including Bain Capital Credit and JC Flowers, was previously involved in several failed transactions. US private equity firm Cerberus approached the group about a buyout in 2020, while the bank’s efforts to merge with rival lender TSB were thwarted the following year.
A deal would cap a turnaround in fortunes for the Co-op Bank.
It first ran into trouble after the takeover of Britannia Building Society in 2009. The deal exposed the lender to a pile of bad loans and led to the discovery of a £1.5bn capital shortfall. Bondholders took control of the bank in a £700mn rescue deal in 2017.
The group returned to an annual pre-tax profit in 2021, and reported £81mn in pre-tax profit in the first nine months of this year.
