In one of the moves to keep afloat in the prevailing financial turmoil, Britannia, the second largest building society in UK, and Co-operative Financial Services have agreed to merge to crate a ‘super mutual’. Now what exactly is a super-mutual? More on it later.
Now on the paper the whole deal goes like this: the two banks are coming together to expand lending operations which is the need of the hour. With nine million customer base, 1200 employees, around 300 branches and £70 of assets , the new super-mutual will function under the Britannia and Co-operative brands, also Co-op’s ‘Smile’ Internet bank, until the process of integration gets completed after which the super-mutual would function under one brand for three years. Britannia would become a subsidiary (wholly-owned) of Co-op and its customers would automatically be given the membership. The two banks have been customer-owned and this is going to be the same after the merger. Not only would they enjoy a share in the profits, but also have a say in the strategy setting sessions. They will enjoy all the banking services rendered by large financial institutions and also reap benefits of savings which these firms will make as a result of consolidation of operations. Put it the other way: downsizing is bound to happen as the firms will operate from a single branch in a city where both of them have one. They have to make economic sense or where would the cost-advantage come from?? But the authorities at Britannia and Co-op both assured that downsizing wouldn’t be compulsory and blatant.
The deal would be voted upon on April 29, 2009 by the Britannia members at the annual general meeting. If it gets through then both the firms will benefit from it. Britannia’s customers would get to enjoy a wide range of baking services while Co-op will gain from the wide customer-base Britannia is proud of. But still the merged entity would be smaller than Nationwide, UK’s largest super-mutual. It will be headed by Neville Richardson (CEO, Britannia) and Bob Burlton (CFS) will be the chairman.
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