The Co-operative Bank and Coventry Building Society have entered into talks over a potential merger of the two high street lenders.
Co-op Bank told investors it had begun “exclusive discussions” with the building society to “evalue the merits of a combination” of the two firms.
There has been speculation this year over several potential bidders for the bank, which has turned around its financial performance and recovered its profits.
Possible bidders for the bank were thought to at one point include Shawbrook and Aldermore banks.
The Co-operative bank could potentially merge with Coventry Building Society
PA
Co-op Bank parted ways with the Co-operative Group in 2017 when it fell into deep financial difficulty and is now owned by a group of private equity investors.
The bank has around 2.5 million retail customers.
Co-op Bank, which claims to be the UK’s leading ethical bank, said last month that it was “exploring potential strategic opportunities” following its recovery and growth over the past three years.
A merger with Coventry Building Society could potentially see it return to a member ownership structure.
Co-op Bank became profitable two years ago before more than quadrupling profits in 2022.
It reported a pre-tax profit of £81.1million for the third quarter of this year, down by a fifth compared to the previous year.
Co-op Bank agreed to buy Sainsbury’s Bank’s mortgage portfolio in August £464million, taking on around 3,500 customers.
Coventry Building Society manages nearly £50billion worth of mortgages.
The building society has more than £45billion in savings balances.
Coventry said a deal would only happen “if it is determined by the society’s board to be in the best interests of current and future members”.
Co-op Bank said: “There is no certainty that these exclusive discussions will result in a transaction.”
