One of Britain’s largest lenders to small companies is planning a £3.5bn merger on the Co-operative Bank, in keeping with a report.

Shawbrook Group has approached the house owners of the Co-operative Bank in current weeks with proposals for a stock-based mixture of the 2 companies, it's understood.

In what could be one of the vital UK offers for the sector because the 2008 monetary disaster, the provide contains of roughly 29% that values the Co-operative Bank, which has 2.7 million retail prospects, at £800m, Sky News reported.

Shawbrook has employed funding bankers at Barclays to advise it on its curiosity.

Together, Shawbrook and the Co-operative Bank reported underlying revenue final yr of practically £375m.

The merger would herald long-predicted consolidation amid a interval of turbulence with surging rates of interest and the disaster precipitated by the collapse of Silicon Valley Bank within the US and the emergency takeover of Credit Suisse by Swiss rival UBS.

Other lenders are additionally anticipated to discover formal affords for the Co-operative Bank.

OneFinancial savings Bank has been considererd as a forerunner, though a current alert that income could be hit by prospects racing to safe new fixed-rate offers has prompted some City analysts to query whether or not it is going to bid.

Aldermore, Nationwide and Paragon Bank have all additionally been named as potential bidders.

Barclays’s position as an adviser to Shawbrook is prone to rule out the foremost excessive road financial institution as a bidder for the Co-operative Bank in its personal proper.

In the autumn of 2021, the Co-operative Bank approached Spanish-owned TSB a couple of merger, however talks did not progress.

Earlier this yr, stories emerged that the Co-operative Bank was exploring a sale, having employed PJT Partners and Fenchurch Advisory.

The Co-operative Bank, initially based in 1872 and now led by chief govt Nick Slape, has since steadily grown its returns, making revenue earlier than tax in 2022 of £132.6m on deposits of £20bn.

The Co-Operative Bank and Shawbrook declined to remark.