Coventry Building Society tables bid to remutualise Co-operative Bank
One of Britain’s biggest building societies has tabled a surprise takeover bid for the Co-operative Bank – a deal that would effectively remutualise one of the country’s most recognisable high street lenders.
Sky News can exclusively reveal that the Coventry Building Society has proposed a tie-up with the Co-operative Bank that would create a financial services powerhouse with close to £90bn in assets.
Talks between the two sides are understood to be progressing, although they are not yet being undertaken on an exclusive basis.
The Coventry’s intervention in the auction of the Co-operative Bank will surprise the industry, since the mutual had not been tipped as a likely bidder.
However, industry insiders said a combination of the two businesses would present a strong cultural and financial fit, while also delivering a huge boost to the cause of financial services mutuals in Britain.
A combined group would be comparable in size to Virgin Money, the London-listed banking group, and would have about five million customers.
The Coventry, which is being advised by the accountancy firm KPMG on the talks, is regarded by peers and regulators as having a credible management team, led by Steve Hughes, its chief executive.
Until last year, the society – the UK’s third-largest by assets – was chaired by Gary Hoffman, the veteran banker who rescued Northern Rock during the 2008 banking crisis.
A combined Coventry-Co-op Bank would be comparable in scale to Virgin Money
Nevertheless, a takeover on the scale of the Co-operative Bank would represent a hugely ambitious move for an organisation which has undertaken few sizeable corporate deals.
One source said the Coventry, which has about two million members, appeared to be “extremely serious” about a deal.
The price under discussion between the Coventry and the Co-operative Bank and their respective advisers was unclear on Wednesday.
Banking analysts have previously touted a price of approximately £800m for the Co-operative Bank.
A spokesman for the mutual said: “At Coventry Building Society, we remain open to opportunities that may enhance the value and services we offer to our current and future members, but we don’t comment on any public speculation.”
Combining the organisations would give the Coventry a major boost in the personal current account and business banking markets.
It was unclear on Wednesday what the fate of the respective brands would be after any deal.
The Co-operative Bank has also drawn interest from other suitors during an auction which kicked off earlier this year.
Shawbrook Bank tabled a predominantly paper-based offer, while Aldermore Bank withdrew from the process without submitting a formal proposal.
Regulators are being kept closely informed about the talks, with one bank analyst saying a takeover by the Coventry would vindicate the constructive approach taken by the Prudential Regulation Authority towards the Co-operative Bank as it encountered severe turbulence during the last decade.
If the Coventry was successful with a bid, it would effectively deliver the Co-operative Bank back into mutual ownership.
In 2013, the Co-operative Bank’s bid to acquire the branch network which became TSB was left in ruins when 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 £1.5bn rescue, even as its former chairman, Paul Flowers, was left humiliated by tabloid revelations about his private life.
The lender then needed a further bailout by investors in 2017, with two major investors – Bain Capital Credit and JC Flowers – subsequently taking a 10% stake in the company.
The remainder of its equity is owned by a syndicate of hedge funds.
Earlier talks about a sale of the Co-operative Bank to Cerberus Capital Management, an often-controversial investor, broke down in December 2020.
In the autumn of 2021, the Co-operative Bank approached Spanish-owned TSB about a merger, but talks failed to progress.
PJT Partners and Fenchurch Advisory Partners are advising the Co-operative Bank on its sale process.
A spokesman for the Co-op Bank declined to comment.
Billionaire Sir Jim Ratcliffe has told Sky News that Britain is ready for a change of government after scolding the Conservatives over their handling of the economy and immigration after Brexit.
While insisting his petrochemicals conglomerate INEOS is apolitical, Sir Jim backed Brexit and spent last weekend with Labour leader Sir Keir Starmer at Manchester United – the football club he now runs as minority owner.
“I’m sure Keir will do a very good job at running the country – I have no questions about that,” Sir Jim said in an exclusive interview.
“There’s no question that the Conservatives have had a good run,” he added. “I think most of the country probably feels it’s time for a change. And I sort of get that, really.”
Politics live: ‘We are in existential battle’ over world order, defence secretary warns
Sir Jim was a prominent backer of leaving the European Union in the 2016 referendum but now has issues with how Brexit was delivered by Tory prime ministers.
“Brexit sort of unfortunately didn’t turn out as people anticipated because… Brexit was largely about immigration,” Sir Jim said.
“That was the biggest component of that vote. People were getting fed up with the influx of the city of Southampton coming in every year. I think last year it was two times Southampton.
“I mean, no small island like the UK could cope with vast numbers of people coming into the UK.
“I mean, it just overburdens the National Health Service, the traffic service, the police, everybody.
“The country was designed for 55 or 60 million people and we’ve got 70 million people and all the services break down as a consequence.
“That’s what Brexit was all about and nobody’s implemented that. They just keep talking about it. But nothing’s been done, which is why I think we’ll finish up with the change of government.”
Read more:
Sir Jim’s mission to succeed at ‘the one challenge the UK has never brought home’
UK needs to get ‘sharper on the business front’
Prime Minister Rishi Sunak has indicated an election is due this year but Monaco-based Sir Jim is unimpressed by the Conservatives’ handling of the economy.
“The UK does need to get a bit sharper on the business front,” he said. “I think the biggest objective for the government is to create growth in the economy.
“There’s two parts of the economy, there’s the services side of the economy and there’s the manufacturing side. And the manufacturing, unfortunately, has been sliding away now for the last 25 years.
“We were very similar in scale to Germany probably 25 years ago.
“But today we’re just a fraction of where Germany is and I think that isn’t healthy for the British economy… particularly when you think the north of England is very manufacturing based, and that talks to things like energy competitiveness, it talks to things like, why do you put an immensely high tax on the North Sea?
“That just disincentivises people from finding hydrocarbons in the North Sea, in energy.
“And what we need is competitive energy. So I mean, in America, in the energy world, in the oil and gas world, they just apply a corporation tax to the oil and gas companies, which is about 30%. And in the UK we’ve got this tax of 75% because we want to kill off the oil and gas companies.
“But if we don’t have competitive energy, we’re not going to have a healthy manufacturing industry. And that just makes no sense to me at all. No.”
‘We’re apolitical’
Asked about INEOS donating to Labour, Sir Jim replied: “We’re apolitical, INEOS.
“We just want a successful manufacturing sector in the UK and we’ve talked to the government about that. It’s pretty clear about our views.”
Sir Jim was keener to talk about the economy and politics than his role at struggling Manchester United, which he bought a 27.7% stake in from the American Glazer family in February – giving him an even higher business profile.
Old Trafford stadium in Manchester. Pic: AP
Push for stadium of the North
He is continuing to push for public funds to regenerate Old Trafford and the surrounding areas despite no apparent political support being forthcoming. Sir Keir was hosted at the stadium for a Premier League match last weekend just as heavy rain exposed the fragility of the ageing venue.
“There’s a very good case, in my view, for having a stadium of the North, which would serve the northern part of the country in that arena of football,” Sir Jim said. “If you look at the number of Champions League the North West has won, it’s 10. London has won two.
“And yet everybody from the North has to get down to London to watch a big football match. And there should be one [a large stadium] in the North, in my view.
“But it’s also important for the southern side of Manchester, you know, to regenerate.
“It’s the sort of second capital of the country where the Industrial Revolution began.
“But if you have a regeneration project, you need a nucleus or a regeneration project and having that world-class stadium there, I think would provide the impetus to regenerate that region.”
Marks & Spencer’s website and app has not been working for several hours, with a message telling shoppers “you can’t shop with us right now”.
“We’re working hard to be back online as soon as possible,” it adds.
All the menus and images have disappeared apart from one showing a model in a green jacket.
Customers trying to use the app got the message: “Sorry you can’t shop through the app right now. We’re busy making some planned changes, but will be back soon.”
The site is understood to have been down for several hours.
Replying to one customer on X, the retailer said: “We’re experiencing some technical issues but we are working on it.”
M&S is the latest high street name to have technical issues – last month some Sainsbury’s shoppers had problems with their online orders.
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The outage comes a few days before M&S is expected to reveal a big jump in annual profits.
It’s been a successful year for the brand, with strong sales across the business following a turnaround plan that has included store closures and cost cutting.
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