Outsourcing specialist Capita has been named as preferred bidder to take over the running of the troubled Co-operative Bank’s £23 billion mortgage book.
The agreement which is subject to regulatory and shareholder approval but is expected to come into force in the first quarter of next year is one of the largest of its kind for a decade, with more than 250,000 customer accounts affected.
The bank, which has been struggling since the discovery of a £1.5bn black hole in its finances last year, said it expected the deal to be worth up to £325 million over the course of the next decade.
In addition to taking over the running of the bank’s mortgage servicing operations, Capita will also acquire the bank’s mortgage administration business, Western Mortgage Services Ltd.
In total, around 660 staff are expected to transfer to Capita as a result of the deal.
“Retail banking is facing unprecedented business and regulatory challenges, and Capita is therefore focusing strongly on developing capacity to support this market,” Capita chief executive Andy Parker said.
“Capita’s ambition is to draw on its business process and customer service transformation expertise to become the leading end-to-end mortgage processing partner, delivering real value to financial services clients.”
Niall Booker, chief executive at the Co-operative Bank, said that developing the core retail mortgage business was key in the bank’s aim to become a more efficient business.
“It is vital we improve our processes, consolidate and utilise up-to-date mortgage systems and, as a smaller bank, ensure we can respond nimbly in a competitive market, mindful of the impact of increased regulation to our cost base,” Mr Booker said.
“These proposals to partner with Capita would support our plans for growth in retail mortgages, and would enable us to continue to deliver high standards of service to our customers and brokers,” he added.