Britannia and Co-Op in merger talks

13 October 2008

Britannia, Britain’s second biggest building society, is in talks with the Co-Operative about a possible merger.

Although the society says the talks are at a very early stage, it adds that the two businesses have a “strong cultural fit” and would represent a merger of “strong equals”.

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 - that, 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.

Despite the two organisations being different types of mutuals, forthcoming legislative changes will allow firms such as building societies, co-operatives and friendly societies to work together.

If the merger goes ahead, the combined organisations would have around £70 billion of assets and a total of six million customers.

Neville Richardson, group chief executive of Britannia, says: "Both businesses have been pursuing successful strategies and don’t need to merge, but we recognise we could be even more successful by coming together and creating the UK's most trusted financial services business.”

He refused to speculate on how the merger may impact customers and employees but added his fellow board members remained committed to its branch network and brand.

Back in June, the Chelsea - the 5th biggest building society - announced it was merging with the Catholic. And in September, Nationwide confirmed it is taking over the Derbyshire and Cheshire societies.   

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