Britannia and Co-Op to create super-mutual

Co-Operative branch

Britannia and the Co-Operative have confirmed that they will merge to create a super-mutual.

The merged business 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 two organisations say it will also be strongly capitalised and well placed to cope with the economic downturn.

Britannia is the second largest building society in the UK, following the merger of Portman into Nationwide in 2007. However, it is still a minnow in comparison to Nationwide, with £32,377 million of assets compared to the larger mutual’s £178,482 million.

It also owns a specialist mortgage lender - Platform Homeloans - which, prior to the credit crunch, was very active in the sub-prime and buy-to-let markets originating over 90,000 mortgages worth over £7 billion since its launch in 2003.

Britannia group chief executive, Neville Richardson, will head up the combined mutual while the Co-Operative’s non-executive chairman, Bob Burlton, will chair the new board.

Rodney Baker-Bates, the current chairman of Britannia, says: "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."

Burlton adds: "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."

Britannia members will vote on the merger at a general meeting scheduled for 29 April 2009. If approved, both brands will continue to be used as well as the Smile internet bank and Platform mortgage brands.

However, the combined group eventually plans to introduce a single product range.

The Financial Services Authority has confirmed that savers who have accounts with both organisations will retain their £50,000 protection with both businesses under the Financial Services Compensation Scheme.