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The UK’s third largest constructing society by property has submitted a bid for Co-op Bank, in a deal that may return the non-public equity-owned lender to mutual possession, in response to individuals acquainted with the talks.
Coventry Building Society has made a non-binding provide for Co-op Bank that values the lender at greater than £700mn, one of many individuals stated. A deal would end result within the merged group with about £90bn in property.
Sky News first reported the Coventry bid.
Coventry, which has about 2mn members throughout the UK, stated: “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.” Co-op Bank declined to remark.
The Co-op Bank kicked off an public sale course of earlier this 12 months and stated final month that it was “exploring potential strategic opportunities, the assessment of which is currently at a preliminary stage”.
The UK excessive road lender had attracted curiosity from different suitors, together with specialist lender Shawbrook and client credit score group NewDay, one particular person acquainted with the talks stated. Shawbrook’s money and fairness provide valued the Co-op financial institution at about £600mn, whereas Aldermore, one other lender, additionally entered talks with the financial institution earlier than withdrawing from the method, the particular person added.
The Co-op Bank, which is backed by US-based traders together with Bain Capital Credit and JC Flowers, was beforehand concerned in a number of failed transactions. US non-public fairness agency Cerberus approached the group a few buyout in 2020, whereas the financial institution’s efforts to merge with rival lender TSB had been thwarted the next 12 months.
A deal would cap a turnaround in fortunes for the Co-op Bank.
It first bumped into hassle after the takeover of Britannia Building Society in 2009. The deal uncovered the lender to a pile of dangerous loans and led to the invention of a £1.5bn capital shortfall. Bondholders took management of the financial institution in a £700mn rescue deal in 2017.
The group returned to an annual pre-tax revenue in 2021, and reported £81mn in pre-tax revenue within the first 9 months of this 12 months.
https://www.ft.com/content/4fd3d6e2-277f-4938-9b97-00431523c989