Co-operative Talks With Britannia About Products

By Lars Paulsson

Oct. 12 (Bloomberg) -- Co-operative Group Ltd., the U.K.'s largest customer-owned retailer, said its financial services unit is holding talks with Britannia Building Society and other companies with the aim of increasing market share and distribution of its services.

A merger with Britannia is ``one possibility,'' although legislation isn't in place to allow a combination of the two companies, according to Duncan Bowker, a spokesman for The Co- operative Financial Services unit.

Co-operative is seeking to promote its services and increase retail deposits that have grown by 14 percent, or 500 million pounds ($849 million), in the six months through Sept. 30, Bowker said today in a telephone interview. Legislation to allow a merger between a co-operative and a building society is being prepared and may become a law next year, Bowker said.

``If it's passed, it opens a gateway for us to consider that as an option,'' he said. Manchester-based Co-operative may also sell its products in Britannia's branches, he said.

The Sunday Telegraph said today that Britannia and Co- operative would have 75 billion pounds in assets. The Co- operative Financial Services has 6.5 million customers, according to its Web site.

Bowker declined to name any other companies Co-operative is in talks with.

Britannia's Chief Executive Officer Neville Richardson confirmed in today's Mail on Sunday newspaper that talks with Co- operative are taking place to combine or work closely together. Britannia's spokesman Graham Leftwich didn't respond to a message left on his mobile phone today seeking comment.

Besides its financial services arm, Co-operative Group operates food stores and pharmacies and provides travel and funeral services.

To contact the reporter on this story: Lars Paulsson in London at lpaulsson@bloomberg.net