Shawbrook has approached the owners of The Co-Operative Bank in recent weeks to discuss plans for a stock-based merger of the two companies valued at £3.5bn, according to Sky News.

The deal set out by the small business lender also comprised of an offer to hand the Co-Operative Bank’s shareholders around 29% of the combined banking group, which is valued at around £800m.

Shawbrook has reportedly hired investment bankers at Barclays to advise it on its interest in its smaller, consumer-focused peer.

In the six months to 30 June 2023, the Co-Op bank reported income of £266.5m compared to £229.6m during the same period a year previously. Pre-tax profits remained flat at £61.8m in H1 2023, from £61.9 in H1 2022.

Sky News has stated that if the deal should go ahead, it would rank among the most significant deals in the banking sector since the 2008 financial crisis.

Other lenders are expected to explore formal offers for the bank, with Aldermore, Nationwide and Paragon Bank being named as prospective bidders.

OneSavings Bank has long been considered as one of the likeliest suitors, although it has been reported that profits would be hit by customers looking to secure new fixed-rate deals, leading some city analysts to question whether it will bid.

A spokesman for Shawbrook declined to comment to Sky News on Saturday, with the Co-Op Bank unable to be contacted for a comment.

Share Story: