Co-op to merge with Britannia building society
Co-operative Insurance (CIS) is to become part of a super mutual with a merger between its parent Co-operative Financial Services and the UK’s second biggest building society the Britannia.
The announcement said: “The new business will combine CFS's strong personal and corporate banking, insurance and investment expertise with Britannia's extensive high street presence and savings and mortgage product strength.”
It is expected to signal a push by mutuals against shareholder-owned companies, reversing the trend of the past 20 years with mutuals becoming stock market-listed firms.
The business will be led by current Britannia group chief executive Neville Richardson. Bob Burlton, the current CFS non-executive chairman will chair the new board. CFS chief financial officer Barry Tootell will become the new chief financial officer. After supporting the integration process, CFS chief executive David Anderson will leave the business.
CFS chairman Bob Burlton added: “This move will accelerate the momentum within the co-operative and mutual sector. Both businesses have been pursuing successful strategies independently and are strong in their own right but we recognise we could be even more successful by coming together to create the UK's most trusted financial services business.”
Combining CFS, part of the world’s biggest consumer co-operative, with Britannia, the UK’s second biggest building society, will create a business with £70 billion of assets, nine million customers, 12,000 employees, more than 300 branches and 20 corporate banking centres. The business will be strongly capitalised, with a pro forma Tier 1 ratio of 9.8% as at 31 December 2008 (calculated on the same basis as if the combined businesses remained standalone).
The two organisations claim the main benefits are:
Combined business to be the most diversified customer-owned business in UK financial services, strongly capitalised and with scale and strength in product, distribution and service.
Strong strategic and cultural fit between the two organisations with expected efficiency and revenue benefits of £60 million a year by year three.
Customers will continue to share profits and have a say in running the business.
Britannia chairman Rodney Baker-Bates said: “The combined and complementary strengths of our businesses will offer customers a strong, fair and ethical alternative to banking plcs. Customers will be owners and will have available all the services they would expect from a major financial provider, together with a real say in setting strategy combined with a share of the profits.”
The new business will be a wholly owned subsidiary of The Co-operative Group.
