Coventry Building Society has reached an agreement to acquire The Co-operative Bank for a sum of up to £780 million, marking a major expansion in the UK financial services sector. This deal has been under discussion for several months and is set to elevate the combined entity’s balance sheet to £89 billion.

This acquisition is expected to enhance Coventry’s presence in the mortgages and savings markets significantly. The integration of Co-op Bank into Coventry Building Society will be a gradual process spanning several years, during which Co-op Bank’s customers will transition into members of the building society, reverting to a mutual ownership model. This model was a hallmark of Co-op Bank more than a decade ago when it was part of the broader Co-operative Group.

Since parting ways with the Co-operative Group in 2017 following financial challenges and a rescue by American hedge funds, Co-op Bank has been under the ownership of private equity investors. Despite these changes, it has maintained its operational stability and profitability.

Throughout the integration process, both Coventry and Co-op Bank will continue operating under their existing names and brands. The specifics of the merger are still being finalized, with both parties emphasizing that while plans are firming up, the completion of the acquisition remains uncertain.

Co-op Bank, with its network of 50 branches and approximately 3,400 staff across the UK, announced last month plans to reduce its workforce by about 400 to streamline operations and reduce costs.

Steve Hughes, Chief Executive of Coventry Building Society, expressed enthusiasm about the acquisition, noting that Co-op Bank’s “financial stability, profitable status, and complementary heritage and offerings will fortify our business, allowing us to enhance the value and service we provide to our members and customers.”