Co-op and Britannia in link-up talks
Oct 13 2008 by Graeme Evans, The Journal
MOVES to create a "super-mutual" from the merger of the Co-op’s financial services arm and the Britannia building society have been revealed.
A tie-up would form a business with more than six million customers and £70bn of assets, although both sides stressed that talks were at an early stage and part of wider discussions about how they could work together.
Legislative changes due to come into force by the end of this year will make it easier for different types of mutuals – building societies, co-operatives and friendly societies – to join forces.
Both organisations are in sound financial health and believe a tie-up could offer customers a customer-owned alternative to the plc market.
Britannia has a 245-strong branch network and 2.6 million savers. CFS – part of the Co-operative Group, the world’s largest consumer Co-op – has a personal and business banking franchise as well as a life and general insurance operation.
Britannia chief executive Neville Richardson said: "As two like-minded, forward-thinking and financially strong mutuals, we’re talking with CFS about how we can work together to create an exciting proposition for our members.
"Both businesses have been pursuing successful strategies and don’t need to merge, but we recognise we could be even more successful by coming together and creating the UK’s most trusted financial services business."
It is not clear whether Britannia’s three million members would receive a windfall payment as part of any merger with the Co-op. Mr Richardson said it was too early to comment about the impact on customers and staff.
The Co-op will be hoping Britannia’s branch network offers a platform for distributing its bank accounts and internet banking arm Smile.
The Co-op said it had also been in contact with other parties about how its products can be sold in their branch networks.
The Co-op said: "We have ambitious growth plans and have had discussions with a number of parties including Britannia about how we can work more closely together for mutual benefit.
A merger would have to be approved in a vote by Britannia’s members. It is the UK’s second largest building society, but has around one-fifth of the assets held by the market leader Nationwide.
