Coventry eyes Stroud buyout

COVENTRY building society, the third biggest in the UK, is in the early stages of merger talks with smaller rival Stroud & Swindon.

Building societies have struggled to raise cash during the recession as a result of them being owned by savers and not shareholders.

Linda Will, Stroud marketing director, said the board was considering the proposal but added that no final decision had been made.

“There are no offers on the table. It is part of the Board’s fiduciary duties to consider an approach from any credible partners.”

Demands by the FSA that building societies hold more capital has led to increasing pressure for them to merge.

But Will denied this was the case.

“We are not being forced by the FSA,” she said. “We hold a huge amount of capital.”

The decision by the Bank of England to keep interest rates low meant Stroud recorded a loss of £3.4m in 2008. Meanwhile, last week, Coventry reported pre-tax profits had more than doubled in 2009 to £56.2m.

Stroud & Swindon has around £2.5bn in assets and 265,000 members. A statement about the talks is likely to be released today.