Coventry Nears Deal to Buy UK’s Co-Op Bank for £780 Million

(Bloomberg) -- Coventry Building Society has agreed to pay £780 million ($971 million) for Co-Operative Bank, the latest sign of consolidation among British lenders.

Non-binding terms have been agreed for an all-cash acquisition of Co-Op Bank, according to a statement Thursday. Discussions are “well advanced” and “the parties are working together to enter into definitive agreements,” while noting an acquisition may still not occur. 

The deal, which would create a lender that would have had an £89 billion balance sheet at the end of 2023, would not require a vote by Coventry’s members, according to the statement. Up to £125 million of the cash consideration will be deferred for a period of three years, subject to future performance.

The firms previously said in December they had entered a period of exclusivity, with Co-Operative Bank saying it was meant to better evaluate the merits of a combination.

Manchester-based Co-Operative Bank has been seeking “strategic opportunities” following its recovery in the past few years. Last year, it agreed to buy the £500 million mortgage portfolio of Sainsbury’s Bank.

The deal comes on the heels of Nationwide Building Society agreeing to acquire Virgin Money UK Plc for £2.9 billion earlier this year. Barclays Plc is also in the process of absorbing much of the retail banking assets of Tesco Plc.

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