Co-op Bank palms buyers £90m dividend because it prepares for mutual possession
- Lender will merge with Coventry Building Society early next year
Co-operative Bank has prepared a £90million dividend payout for investors ahead of its looming return to mutual ownership.
The lender, which will merge with Coventry Building Society early next year in a £780million deal, told investors on Tuesday that trading conditions had been ‘robust’ in the third quarter.
Co-op highlighted a bounce in customer deposits and wholesale market activity, with the bank boasting a ‘significant surplus to all capital and liquidity requirements’.
Boss Nick Slape said Co-Op was focused on delivering value to shareholders, who have ‘patiently supported the bank in its turnaround‘.
Co-op in March announced plans to cut 400 jobs as its seeks to ‘simplify and transform the business’.
Co-op’s board has recommended a dividend just shy of 1p per class A ordinary share for the year to 31 December, well ahead of 2023’s 0.13p full-year dividend and returning £90million to investors in total.
The lender is set to merge with Coventry Building Society in the first quarter of 2025
Slape said net mortgage balances are up 2 per cent this year, while net SME business lending has soared 16 per cent.
Meanwhile, total customer deposits are up 1 per cent and Co-Op has seen around 70 per cent fewer current account switch-outs.
The bank has also performed well in the wholesale market with a new £500million three-year covered bond issuance and the successful early refinance of £200million of other liabilities ‘both attracting very strong demand from investors’, according to Slape.
He added: ‘We have focused on delivering shareholder value.
‘Our shareholders have patiently supported the bank in its turnaround and, following the continued profitability and successful normalisation of capital requirements, I am delighted that the board was able to declare an interim dividend which returns value ahead of the expected completion of the sale of the bank to Coventry Building Society in Q1 2025.
‘The bank is in a strong position, maintaining a resilient, low-risk balance sheet and sustained credit quality.’
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