COVENTRY Building Society is understood to be stepping up its campaign to take over Northern Rock plc.
The Midlands-based mutual, which is the UK’s third biggest building society, is believed to have got the thumbs-up in a private poll to see whether people would support a merger with the ‘good’ part of the Newcastle-based bank.
It is now thought to be preparing to talk to the Rock’s board and to lobby politicians in a bid to win their backing for its plans.
It is not the first time the Coventry has been linked with the state-owned Rock, which converted from a building society when it was floated on the stock exchange in 1997.
Last month the Coventry, which took over the Stroud and Swindon Building Society in 2010, said: “Coventry Building Society’s commitment to mutuality has helped deliver consistently superior financial performance and member value throughout the financial crisis.
“The board believes that these credentials would benefit Northern Rock customers if it were to be remutualised as part of Coventry Building Society.”
It is thought that it would need to raise around £200m in new capital to take over the Rock and convert it back into a mutual.
The idea already has political backing; at the start of the month, MPs in the influential cross-party Commons Treasury Committee said there were attractions in the idea of remutualising the state-owned bank. Supporters also believe this option would make the Rock stronger in the long term, rather than opting for a quick sale to rake in as much as possible for the Treasury.
Northern Rock has no comment to make about the fresh speculation. But a spokeswoman said: “We have appointed Deutsche Bank as our financial advisers to assist us in assessing the options to return Northern Rock to the private sector, when a proposition is reached that is in taxpayers’ best interests.”
Northern Rock is considered a good fit for the Coventry. The Midlands mutual has 1½ million members, £21bn-plus in assets and 48 branches – none of which overlap with the Rock’s 75 branches. Last month Rock’s results revealed a loss of £232.4m, but it said at the time it did not necessarily have to be in the black for a sale to the private sector to go ahead.
Most of the banks’s 4,500 employees, who on average earn £25,000 a year, will receive a payout of around 10% of their salary in bonus. The Yorkshire Building Society has also been linked to a possible bid to return the Rock to mutual status.
