The Co-operative Bank received a takeover approach from US private equity firm Cerberus, the latest in a series of potential deals in the struggling European financial sector.
The UK lender announced Tuesday that it had received a non-binding offer from a “financial sponsor with knowledge and experience of investing in European financial services firms”, which it passed on to its shareholders and advisors.
People briefed on the talks confirmed that it was Cerberus, which owns a 5% participation in German lender, Commerzbank, and this year pushed for a management reorganization and a change of strategy.
Consolidation across the European banking market has long been expected due to the need for substantial cost cuts due to the extremely low or negative interest rates affecting the sector. Activity has increased in recent weeks, with talks between BBVA and Sabadell of Spain announced on Monday evening. Sabadell also owns the UK’s TSB bank.
The cooperative has struggled for more than a decade, since its ill-fated acquisition of the Britannia Building Society in 2009 exposed it to a large number of bad debt and led to the belated discovery of a capital shortfall of $ 1.5 billion. pounds in 2013.
It was eventually taken over by bondholders in a £ 700 million bailout deal in 2017.
Last month, the bank promoted CFO Nick Slape to become its own sixth CEO in nine years, taking over from Andrew Bester, who had already begun to implement a turnaround.
At the time of his appointment, Slape said the company “was proving resilient in these difficult times.”
“The next few years will continue to be crucial for the cooperative bank as we look to build on the progress to date and complete our recovery plan,” he added.
In August, the cooperative announced it would close in quarter of its branches and cut 350 jobs, about 10 percent of its workforce.
On Tuesday, he said he was in talks with the unnamed suitor, but that the talks were at a preliminary stage. Sky News first reported Cerberus as a bidder. Cerberus declined to comment.
In Germany, the private equity group launched an attack on Commerzbank’s leadership in June, calling for “significant changes to the company’s supervisory board, board of directors and strategic plan” to stop a “downward spiral” caused by those who l investor called inflated costs, low profits and managerial inaction.
Cerberus also owns a 3% stake in Deutsche Bank.
If BBVA’s approach to Sabadell were to be successful, TSB would be considered a potential divestiture for the newly formed company.
The European consolidation also included Spain CaixaBank agrees in September to purchase Bankia. This followed Intesa Sanpaolo’s acquisition of Italian rival UBI Banca in the summer, the largest European banking deal in the 12 years since the financial crisis.