Co-op and Britannia in ‘super-mutual’ merger

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The pair, two of Britain's biggest customer-owned financial services groups, will form one of the largest financial services groups in the UK, with around £70 billion of assets, 300 branches and over 12,000 employees. Britannia is the UK's second-biggest building society and Co-operative Financial Services is part of the country's largest co-operative.

"We are offering an ethical alternative to the shareholder-owner banks. We hope it will create tremendous competition for them and attract lots of new customers," Britannia chief executive Neville Richardson said today.

"Britannia is known for mortgages, so its customers will benefit from a more diversified business offering a full range of banking services. Co-op customers will benefit from access to a much bigger branch network."

He pointed out that the merged group will have a bigger mortgage business than banking giant HSBC and a larger savings business than NatWest owner Royal Bank of Scotland. Britannia already ranks among the top 10 mortgage lenders in the UK, while CFS is in the top 10 insurance providers.

The merged group will be a subsidiary of the Co-operative Group, with Britannia members becoming members of the Co-op if they approve the deal at a vote in April. Initially it will continue to trade under the Britannia and Co-operative brands as well as the Co-op's internet bank Smile and will only take on a single brand name after the integration process has been completed in around three years.

Richardson will head the new business and current CFS non-executive chairman Bob Burlton will be chairman. When the merger is under way, CFS chief executive David Anderson will stand down.

The group is expected to cut about 1000 staff from a workforce of 12,000 but it said any reduction would come largely from natural attrition and it does not intend to make compulsory redundancies. Some branches may merge.

The deal has been made possible by new legislation allowing building societies more freedom to merge while keeping mutual ownership.