Shawbrook seeks massive £3.5bn Co-operative Bank merger

An exciting potential merger is on the horizon for the Co-operative Bank. The bank is considering joining forces with Shawbrook, a specialist lender with a significant customer base of small businesses, real estate agents, and consumers. This merger would result in the creation of a combined bank worth an impressive £3.5bn, with the Co-operative Bank accounting for around 29% of the business. Shawbrook, founded in 2011, is currently owned by private equity firms, including British funds BC Partners and Pollen Street Capital.

But the Co-operative Bank’s owners are not limiting themselves to one potential partner. They are also contemplating a wider auction of the asset, with other potential suitors including OneSavings Bank, Aldermore, and Paragon.

If the merger with Shawbrook materializes, it would follow the trend of recent banking industry consolidations, such as HSBC’s acquisition of the UK arm of Silicon Valley Bank and the forced sale of Credit Suisse to UBS. These developments highlight the rapidly changing landscape of the banking sector.

Since losing its mutual status, the Co-operative Bank has faced pressure from its customers to return to some form of cooperative ownership. Long-standing customers and campaigners at Save Our Bank have expressed their desire to “build a co-operative stake in the bank.” These activists have also called for clear ethical policies at the bank, and the Co-operative Bank updated its commitments in 2022 to address these concerns.

While the Co-operative Bank and Shawbrook remain tight-lipped about the potential merger, this opportunity has generated significant interest and speculation.