Co-op Bank receives approach from private equity bidder

The Co-operative Bank said it had received a takeover approach from an unidentified private equity bidder, the latest in a flurry of potential deals in the struggling European financial sector.

The UK lender announced on Tuesday that it had received a non-binding offer from a “financial sponsor with knowledge and experience of investing in European financial services businesses”, which it had passed on to its shareholders and advisers.

The Co-op said it was in discussions with the unnamed suitor, but negotiations were at a preliminary stage. 

Consolidation across the European banking market has long been expected due to the need for substantial cost cuts as ultra-low or negative interest rates hit the sector. Moves have ramped up in recent weeks with talks between BBVA and Sabadell of Spain announced on Monday night. Sabadell also owns British high street bank TSB.

Spain’s CaixaBank agreed in September to buy Bankia. That followed Intesa Sanpaolo’s acquisition of Italian rival UBI Banca in the summer, the largest European banking deal in the 12 years since the financial crisis. 

The Co-op has struggled for more than a decade, since its ill-fated takeover of Britannia Building Society in 2009 exposed it to a large number of bad loans and led to a belated discovery of a £1.5bn capital shortfall in 2013.

It was eventually taken over by bondholders in a £700m rescue deal in 2017.

Last month the bank promoted its chief financial officer, Nick Slape, to become its sixth chief executive in nine years, taking over from Andrew Bester, who had already started implementing a turnround plan.

At the time of his appointment, Mr Slape said: “Our franchise is proving resilient in these challenging times, and the steps made in completing major components of the transformation means we have a platform for growth. The next few years will continue to be key for the Co-operative Bank as we look to build on the progress to date and complete our turnround plan.”

In August Co-op announced it would close a quarter of its branches and cut 350 jobs, about 10 per cent of its workforce.

Should BBVA’s approach for Sabadell succeed, TSB Bank, the British subsidiary of Sabadell, would be viewed as a potential disposal for the newly formed business.

Source: Financial Times