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Co-op and Britannia merge to tap growth

TWO of Britain's largest mutual banks said yesterday they will merge to form a financial business with 70 billion pounds (US$98 billion) in assets and more than 9 million customers.

The combination of Co-operative Financial Services and Britannia Building Society, both owned by their customers, will have over 12,000 employees and more than 300 branches.

The new business will be a wholly owned subsidiary of The Co-operative Group, which has interests in financial services, food, travel, pharmacy and funeral care. Britannia members will become members of the Co-op, the companies said.

"This move will accelerate the momentum within the co-operative and mutual sector," said CFS chairman Bob Burlton. "Both businesses have been pursuing successful strategies independently and are strong in their own right but we recognize we could be even more successful by coming together to create the UK's most trusted financial services business."

Citing a "strong strategic and cultural fit between the two organizations," the company expects synergies of about 60 million pounds a year by the third year of the deal.

The combined company will continue to trade under Britannia and Co-op brands for the time being, though the intention is to create a single product range, the companies said.

Co-operative Financial Services reported pretax profit of 81.2 million pounds in 2007, while Britannia had a pretax profit of 50.5 million pounds.

The combination is subject to a vote by Britannia members on April 29.


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