The new business will be a wholly owned subsidiary of The Co-operative Group

The boards of Britannia Building Society and Co-operative Financial Services, two customer-owned financial services businesses in the UK, have agreed to merge their businesses.

Combining Co-operative Financial Services (CFS) with Britannia is expected to create a business with GBP70 billion of assets, nine million customers, 12,000 employees, more than 300 branches and 20 corporate banking centres. The business will be capitalised with a pro forma tier one ratio of 9.8% as at December 31, 2008.

The business will be led by current Britannia group chief executive Neville Richardson. Bob Burlton, the current CFS nonexecutive chairman, will chair the new board. Barry Tootell, CFO of CFS, will become the new CFO. After supporting the integration process, CFS chief executive David Anderson will leave the business.

The new business will be a wholly owned subsidiary of The Co-operative Group. Britannia members will become members of The Co-operative Group and will need to approve the deal in a vote at a general meeting expected to take place on April 29, 2009.

The new business will continue to trade under the Britannia and Co-operative brands, as well as the Smile internet bank and Platform intermediary lender brands. It will look to move to a single product range once the necessary integration of customer systems is complete, but customers will see no immediate change to the products and services they receive.

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