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The Co-operative Bank to bid for £650m Sainsbury’s Bank mortgage book – reports

  • 22/02/2023
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The Co-operative Bank to bid for £650m Sainsbury’s Bank mortgage book – reports
A Sky news report suggests The Co-operative Bank, the former mutual, has put forward an offer to buy Sainsbury's £650m mortgage book, which would finally end the supermarket's involvement with the UK mortgage market.

The exclusive suggests the private equity firm and hedge fund-owned Co-op is among several bidders for the Sainsbury’s book.

One insider said the Co-op remains the frontrunner in the process, being run by Deloitte.

The move is significant, partly because it would herald Sainsbury’s Bank’s formal exit from the UK mortgage market after it ceased new lending in 2019.

The Co-operative Bank’s annual results out on 1 March are expected to show a further improvement in its fortunes, according to reports, bolstered by rising interest rates.

Over the first nine months of 2022, Co-op did total gross lending of £3.7bn. New business accounted for 60 per cent of this at £2.3bn was new business and the rest remortgages.

The vast majority of the bank’s new business is driven through its intermediary brand ‘Platform’.

A Co-op spokesman said: “We have communicated throughout 2022 that we remain conscious of mortgage margins and therefore have taken action to increase or decrease lending, in order to protect [those]. However, given the Bank’s strong capital position, management continually review opportunities to expand mortgage lending when economically viable.”

UK Finance figures confirm Co-op was the UK’s 11th biggest gross mortgage lender at £5.5bn in 2021 rising from £3.6bn in 2020.

A review in 2019 by Mark Zemler, a former IMF official, into the mutual’s longstanding issues which arose between 2008 and 2013 resulting in near collapse, concluded the Financial Services Authority (the previous regulator) had failed across multiple fronts in its regulation of the business.

Following the credit crunch, on 29 April 2009, Britannia members voted overwhelmingly to become part of Co-operative Financial Services and the Co-Op’s chairman from 2010 to 2013 was later banned by the FCA for inappropriate behaviour including sending sexually explicit messages and discussing illegal drugs using his work email account.

Zelmer found the FSA missed several chances to examine the bank in greater detail, particularly around its purchase of the beleaguered Britannia Building Society.


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