Coventry Building Society is struggling to complete its £780m Co-operative Bank deal

Coventry Building Society is struggling to complete a £780m takeover of the Co-operative Bank, which would catapult the mutual into the ranks of Britain’s biggest lenders.

Sky News has learned that Coventry are trying to put the finishing touches on a definitive deal in the next few days to avoid it falling under the auspices of the UK Takeover Code.

Sources said the two sides are keen to avoid additional financial and regulatory complexities that could arise if the deal becomes subject to the code.

Coventry and Co-operative Bank now hoped to resolve residual issues, including a number of balance sheet provisions, in the coming days.

They have been in talks for months, with an announcement in April that they had signed non-binding terms.

If completed, the deal will effectively remutualize the Co-operative Bank more than a decade after the Co-operative Bank came close to collapse and had to be bailed out by US hedge funds.

The tie-up will create an organization with millions of customers and assets of almost £90 billion.

The UK’s third largest building society will not, however, give its 2 million members a vote on the Co-operative Bank takeover, in line with Nationwide’s decision to deny a say to its 17 million members on the proposed £3bn acquisition of Virgin Money.

Coincidentally, Coventry and Co-operative Bank combined would be comparable in size to a stand-alone Virgin Money, with around 5 million customers in the UK.

Combining the organizations would give Coventry a major boost in the personal current account and business banking markets.

In 2013, the Co-operative Bank’s bid to acquire the branch network that became TSB was left in ruins when the extent of its own crisis emerged.

At the time, it was part of the wider Co-op group but was forced to turn to US hedge funds to secure a £1.5bn bailout, even though its former chairman, Paul Flowers, was left humiliated by the tabloid revelations about his private. life.

The lender then needed another bailout from investors in 2017, with two major investors – Bain Capital Credit and JC Flowers – subsequently taking a 10% stake in the company.

In the autumn of 2021, the Co-operative Bank approached Spanish-owned TSB about a merger, but talks did not progress.

PJT Partners and Fenchurch Advisory Partners are advising the Co-operative Bank on its sale discussions.

JP Morgan and KPMG are advising Coventry.

Coventry and Co-operative Bank declined to comment.

(c) Sky News 2024: Coventry Building Society scrambles to complete £780m Co-operative Bank deal