- Britannia members overwhelmingly endorse plans to merge with
The Co-operative Financial Services (CFS) to create new super-mutual
- New business will be the most diversified customer-owned enterprise in UK financial services, providing ethical alternative to banks
- Strong strategic and cultural fit between the two organisations with expected efficiency and revenue benefits of £60 million a year
- Customers will continue to share profits and have a say in running the business
Members of Britannia Building Society have voted overwhelmingly in favour of merging with The Co-operative Financial Services to create the first super-mutual - an ethical alternative to shareholder- and Government-owned banks.
More than 450,000 Britannia members voted at the Society’s annual general meeting, held at the Birmingham National Exhibition Centre today (Wednesday, 29 April). 88.6 per cent of savings members voted in favour, well over the 75% majority required, and 86.2 per cent of borrowing members supported the proposal, well over the 50% majority required.
The merger, which has already been approved by The Co-operative Group and CFS boards, is expected to become effective on 1 August, subject to confirmation by the FSA.
In the first-ever merger between different types of member-owned businesses, the new organisation will combine the strong CFS personal and corporate banking, insurance and investment expertise with Britannia’s extensive high street presence and savings and mortgage strength.
Combining CFS, part of the world’s biggest consumer co-operative, with Britannia, the UK’s second biggest building society, 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 business will be led by current Britannia group chief executive Neville Richardson. Bob Burlton, the current CFS non-executive chairman will chair the new board.
Mr Richardson said: “I’m delighted that Britannia members have endorsed their Board’s recommendation to merge with CFS. They recognised that the combined business will offer them everything they love about Britannia – we’ll remain mutual, we’ll maintain an extensive branch network and we’ll continue to share profits with members – while offering them enhanced products and services, the benefits of being part of a larger group and the chance to earn even greater member rewards.
“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 and a share of the profits.”
CFS chairman Bob Burlton added: “This move will accelerate the momentum within the co-operative and mutual sector. 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 co-operative and mutual movements have never been more relevant. People are crying out for a new way of doing business with a financial business that truly has their interests at heart. This proposed merger offers a unique opportunity to create a new force in British financial services, with the scale to offer customers a full range of products and services that are ethical, mutual and co-operative.”
The new business will be a wholly owned subsidiary of The Co-operative Group, one of the world’s largest and most successful consumer co-operatives with core business interests in financial services, food, travel, pharmacy and funeral care. Britannia members will become members and co-owners of The Co-operative Group.
Customers will see no immediate change to the products and services they receive and the new business will continue to trade under the Britannia and Co-operative brands.
The full range of banking, savings, investment, insurance and mortgage services will become available from an expanded network of more than 300 branches, British-based call centres and the internet after integration of the two businesses, which is expected to take up to three years.
Britannia and CFS have a tradition of sharing profits with their members, and customers will have the potential to earn greater member rewards through the wider range of products offered by the most broadly based and diversified financial services mutual in the UK, and through wider membership of The Co-operative Group.
The combined business will expect to deliver more than £60 million a year in efficiency and revenue benefits and, as a customer-owned business, customers will share in these savings through more competitive rates, improved customer service or increased member dividends.
The merged business will continue to have a significant presence in Leek and Manchester. Combining the two branch networks will increase the number of branches available for customers to more than 300. Where there are two branches in the same town, these may be merged in due course but there will be no compulsory redundancies among branch staff as a result of the merger.
It is expected that there will be some reduction in roles during the three-year integration process, however significant synergy benefits are also expected from procurement and supplier savings. Any compulsory redundancies will be kept to a minimum through redeployment, re-training and normal staff turnover over the three-year timeframe.
About The Co-operative Financial Services and Britannia
The Co-operative Financial Services (CFS) is part of The Co-operative Group, which is the world’s largest consumer co-operative with over three million members, over £10 billion turnover, and core business interests in financial services, food, travel, pharmacy and funeral care. The Co-operative Group has over 4,500 retail trading outlets.
CFS provides a range of financial products, from current and savings accounts to credit cards, personal loans, corporate lending and payments, insurance and investment products and pensions to six million customers. It has 109 retail and corporate centres and over 1,000 face-to-face financial advisers throughout the UK. It employs 8,000 people with a major presence in Manchester, Skelmersdale and Stockport.
Britannia is the UK’s second largest building society, with nearly three million members countrywide. Its 4,700 employees are based at offices in Leek, London, Bristol and Plymouth and 245 branches across the UK.