The Co-operative Bank has revealed it is looking at “strategic opportunities” following a turnaround in recent years, amid reports that suitors are weighing up bids.
The lender – which is no longer part of the wider Co-operative Group – said in its third quarter update that “following the bank’s strong recovery and growth in the past three years, the bank is exploring potential strategic opportunities, the assessment of which is currently at a preliminary stage.”
The Co-op stressed there was “no guarantee that such discussions will result in any eventual transaction”.
It comes after it was reported that a number of possible suitors were looking at making a bid for the Co-op Bank, which is said to have at one stage included specialist lenders Shawbrook, Aldermore and Paragon Banking Group.
But it was reported last month that while Aldermore had mooted a tie-up with Co-op Bank, it had since ditched the plans.
The Co-op Bank, which has about 2.5 million retail customers and says it is the UK’s leading ethical bank, agreed a £464 million deal in August to buy Sainsbury’s Bank’s mortgage portfolio, adding around 3,500 customers with balances of around £479 million.
Under chief executive Nick Slape, the Co-op Bank has been leading an accelerated turnaround on its path to recovery after being rescued by a group of hedge funds in 2017.
The once-flailing bank became profitable two years ago and more than quadrupled profits in 2022, although its latest update showed a steep drop in quarterly pre-tax profits, down 21% to £81.1 million.
On an underlying basis, profits fell 5% to £97.9 million.
The group’s net interest income – the difference between what a bank charges for loans and pays for savings – lifted 10% to £395.2 million as it was boosted by higher interest rates.
Mr Slape said the recent Sainsbury’s mortgage deal was the group’s “first portfolio acquisition in more than a decade, and highlights the bank’s turnaround and focus on both organic and inorganic opportunities”.
He said: “Our mortgage and savings transformation programme continues at pace with mortgage originations now live on a new re-branded platform, The Co-operative Bank for intermediaries, as we start to see the benefits of our accelerated investment.”