Britannia and Co-op financial arm set to merge
It has today been announced that the Britannia building society and the Co-op financial arm will take advantage of pending legislation to combine their services and create a group with over £70 billion of assets. While there will be no windfall tax for members the combined entity will have over 9 million customers and offer a serious challenge to the largest mutual society, the Nationwide building society.
It is interesting to see the two entities agree a merger on a strong footing rather than being forced to work together to survive. The combination of the two operations is expected to offer £60 million in annual savings by year three and offer a more focused company with a far heavier national spread. Many experts suggest this could be the first of a number of mutual society mergers and while the deal will not go through before March, when the new laws come into play, it would appear to be a done deal.
On the whole the mutual society sector has fared far better than traditional UK banks because of less reliance on the money markets where finance costs have risen significantly and liquidity has plummeted. It will be interesting to see which of the mutual societies go on the takeovers and mergers trail to reposition themselves for the future.
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