Possible merger between Britannia building society and Co-Operative

Article source: www.mortgagebrokers4london.co.uk

Possible merger between Britannia building society and Co-Operative

The Britannia Building Society and The Co-Op have confirmed rumours that they have commenced negotiations with the Co-Operative Financial Services [CFS]. Britannia commented that the negotiations are broad and wide ranging. They have also stated that is may lead to the possibility of a merger in the near future.

The second largest building society in the land, Britannia, boasts a well established network of branches and a well established savings and a large mortgage base of clientele. Co-Operative Financial Services, part of the Co- Operative Group, is the largest consumer Co-Op in the world. Co-Operative Financial Services has a strong personal and business banking presence along with years of experience in the life and general insurance sectors.

If the two financial institutions were to merge, their customers would the beneficiaries. The business as a building society or co-operative would be wholly owned by its customers and it would be a very ethical operation. Being a co-operative or a building society would give the new formed company the added benefit of not having to be exposed to fluctuations in the stock market as with Public Limited Company.

The newly merged financial institution would have added strength both in terms of their combined assets and their customer base; if successful the merger would see an organisation born with approximately £70 billion worth of assets and a total of approximately six million customers.

The Britannia Building Society said that the negotiations were still at an early stage and that they had not as yet arrived at any firm or substantial decisions. They said that it was too early to say what impact this would have on their customer base and their huge workforce. They continued to add that they would still remain committed to their Staffordshire headquarters, their extensive network of high street branches and their strong Britannia brand name.

At this moment, according to United Kingdom banking regulations, it is prohibited for co-operatives to merge with the building societies because of their distinct differences. This impending legislation will soon see the law amended to remove the barriers. Co-operatives and Building Societies will soon be able to work together and even merge without any hurdles.

Owing to their rule, building societies usually operate in a somewhat different manner from banking institutions. There are however conditions that are set in order to prevent them from entering into risky deals. No building societies have ever collapsed and they are traditionally seen as by many people as the best option for saving their money with; this is due to the fact they are owned and run by their members instead of being a Public Limited Company.

What is a Public Limited Company (PLC)?

A public limited company is a form of limited company, which by its very existence is allowed to sell its shares to members of the public, hence the word public. A Public Limited Company can be recognised by its name; all such company are required to include either ‘Public Limited Company’ or the abbreviation ‘Plc’ at the end of their name.

The rules and regulations surrounding a Public Limited Company, or PLC, are very different from a traditional Limited Company. For starters the minimum amount of shares that can be issued for a Public Limited Company is equivalent to £50,000, whilst for a normal Limited Company the subscription amount starts from just £1.