Boss Nick Slape says Co-operative Bank is back and looking for an acquisition

Strategy: CEO Nick Slape is considering flotation in 2023

Cooperative Bank is back. Banks have been at risk in the past, at least according to CEO Nick Slape, who is set to prove that “ethical” lending does not mean paving the way for financial collapse. Was there.

“We’re basically on track to generate year-round profits,” says Slape. “I actually had to go back to the team and see when the bank last made an annual profit,” he adds.

To show the bank’s new confidence, 58-year-old Slape is looking for a deal. He surprised the city in October with a surprise bid for rival TSB.

The £ 1bn bid was rejected, but it sent a strong signal to the city. Co-op Bank wants to not only recover, but also grow, take on bigger rivals and ride the wave of ethical lending.

In contrast, less than a decade ago, a £ 1.5 billion black hole was on the verge of collapse. Coincidentally, the acquisition of TSB failed at the time, and the offer was withdrawn in 2013 due to financial stagnation.

Things got worse when Rev. Paul Flowers, then chairman, was involved in the sex and drug scandals revealed on Sunday’s Mail on Sunday.

Slap is keen to ride on his forefoot again. He believes that Co-op needs to add ballast before it poses a serious threat to the Big Four accounting firms of Barclays, HSBC, NatWest and Lloyds Banking Group.

“We are a small, small, medium-sized bank,” says Slape, pointing out a £ 21 billion deposit. TSB has £ 36 billion. “You need to be specialized or bulky.”

Without size, it would be impossible to generate enough profit to cover the enormous costs of running a bank, he explains. These small banks (Big 4 “challenge”) are considering mergers to overcome this problem.

Last month, private equity firm Carlyle approached Metrobank about the acquisition, but soon left.

Slape refuses to reveal potential targets, but he says he’s looking at some – he hints that TSB is still the top choice. “We want it to be fixed in our kind of values ​​and ethics-that’s the key,” he says. Co-op’s ethical policy prohibits serving oil companies, miners and businesses that cause climate change. It also excludes tobacco, weapons to oppressive regimes, and other stocks deemed unethical by customers. This is a policy since 1992.

Slape is looking for targets that owners are already willing to sell. This is the “executability” of the transaction. “If it’s a private equity house that’s been there for years,” he suggests.

Strengthening your area of ​​expertise may also provide an alternative to a complete acquisition.

Analysts still consider the TSB to be a prize. Sainsbury’s Bank may be the target. Cooperatives can also pick off their mortgage portfolio. For example, specialist provider Kensington was recently put up for sale by a private equity backer. Can Slape put another crack in the TSB? Spanish owner Sabadell tried to offload it before withdrawing the process earlier this year.

“We wanted to make it clear that we think this is an attractive combination for us,” Slape explains. “We are similar, we have a very similar balance sheet.”

So is the co-operative bank negotiating with TSB again? “We respect their position on this. We are not talking to them and we are not talking to them,” he says. It’s like reading a script.

He “has no intention” to make higher proposals: “We have clarified our position.”

Co-operative banks may look like unlikely invaders. That was also the goal last year when US private equity firm Cerberus took an acquisition approach.

But it is one of the oldest challengers. Founded in 1872 as part of the Cooperative Group, it is now owned by a consortium of hedge and private funds, including Silverpoint Capital, Golden Tree, Anchorage Capital, Bain and JC Flowers. Slap, a wall-dyed city bunker and senior behind Deutsche Bank, Lehman Brothers and Lloyds, is the fifth CEO in 10 years.

Banks were boosted by a surge in pandemic mortgage borrowing boosted by stamp duty holidays. Last year, we were forced to issue new bonds to strengthen our safety net in case of trouble.

He is currently in the “next stage” and is developing a new five-year strategy.

“I think 2021 is the turning point. This kind of loss and recapitalization has come to an end. It’s really important for me that banks can make a profit.”

He plans to reduce costs to less than £ 300 million annually by 2024, and plans to reduce the bank’s headquarters in Manchester to save around £ 3 million annually.

He wants to expand his customer base next year by launching a “credit repair” loan for people whose credit history is contaminated.

However, he insists that: ‘We are a very conservative bank and have a very high credit score cutoff.

“But going back to our values ​​and ethics, I would like to serve those who may have damage to their credit records.”

Stock market flotation may also be on the card. He says 2023 is “reasonable time frame: there is a two-year profit behind you.”

However, Slape admits, and it’s clear that he’s leaving the door wide open for the acquisition. [in assets] It will still be a small levitation. ”

Despite TSB’s recent refusal, it could soon be a third fortune for co-operative banks.

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Boss Nick Slape says Co-operative Bank is back and looking for an acquisition

Source link Boss Nick Slape says Co-operative Bank is back and looking for an acquisition

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