Super-mutual merger set for August
The Britannia Building Society and Co-operative will merge to create a super-mutual on 1 August following a successful vote by members.
More than 450,000 members of the building society voted at its annual general meeting, with 88% of savings customers and 86% voting in favour of the merger. Although both organisations are mutuals, this is the first time two different member-owned businesses have merged.
Together the new business will boast nine million customers, 12,000 employees and more than 300 branches. It will also have £70 billion of assets behind it, a fact that should leave the super-mutual well-placed to weather the economic storm, according to Co-operative chairman, Bob Burlton.
"This move will accelerate the momentum within the co-operative and mutual sector,” he says. “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."
The merger will become effective from 1 August, subject to confirmation by the Financial Services Authority. After this time, Britannia will become a wholly owned subsidiary of The Co-operative Group. Its members will become members and co-owners of The Co-operative Group.
However, the full integration of the two businesses is likely to take up to two years, and customers will see no immediate change to the products and services they receive. The combined business will be led by Britannia’s group chief executive, Neville Richardson, while Burlton will chair the new board.
Richardson says: "The combined and complementary strengths of our businesses will offer customers a strong, fair and ethical alternative to banks. 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 and a share of the profits."
This is a mutual organisation owned by its members and not by shareholders. These societies offer a range of financial services but have historically concentrated on taking deposits from savers and lending the money to borrowers as mortgages, hence the name. In the mid-1990s many societies “demutualised” and became banks. One academic study (Heffernan, 2003) found demutualised societies’ pricing on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. In 1900, there were 2,286 building societies in the UK; in 2011, there are just 51.