Subject to the approval of the Financial Services Authority, the deal will bring 245 additional high-street branches and over 4,000 staff into the Co-operative Group’s family of businesses plus, significantly, almost three million members,
The new business will be led by current Britannia Chief Executive Neville Richardson, while Bob Burlton, the current CFS non-executive chairman, will chair the new board. Both men are thrilled and excited by the potential for what will become the biggest and most diverse customer-owned enterprise in the UK financial services sector — and a real alternative to the discredited high-street banks.
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.”
Britannia members backed the merger proposals at the society’s annual general meeting at the National Exhibition Centre, Birmingham, with over 450,000 exercising their right to vote.
88.6 per cent of savings members voted in favour – well over the 75 per cent majority required – and 86.2 per cent of borrowing members supported the proposal, again well over the 50 per cent majority required.
The merger, which has already been approved by the Co-operative Group and CFS boards, is the first in the UK between different types of member-owned businesss and is expected to become effective on August 1 once the FSA’s consultation process is complete.
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 new business will be a wholly owned subsidiary of the Co-operative Group and Britannia members will become Group members. In a press statement, Britannia and the Group said building society customers will see no immediate change to the products and services they receive and the business will continue under their brands.
The full range of banking, savings, investment, insurance and mortgage services will become available from an expanded network of more than 300 branches, UK-based call centres and the internet after integration of the two businesses, which is expected to take three years.
The statement says the combined business will expect to deliver more than £60 million a year in efficiency and revenue benefits and customers will share in these savings through more competitive rates, improved customer service or increased member dividends.
The business will continue to have a presence in Leek — where Britannia has its head office — and Manchester and, although some branches may close in towns where there will be more than one branch, the pre-vote pledge of no compulsory redundancies among branch staff as a result of the merger has been reiterated.
However the businesses say it is anticipated there will be some reduction in roles during the integration, but significant benefits are also expected from procurement and supplier savings. Compulsory redundancies will be kept to a minimum through redeployment, re-training and normal staff turnover over the three-year timeframe.