The Co-operative Group has laid out plans to plug a £1.5bn hole in its banking business.
As part of a complex ‘bail in’, bond holders will be offered shares in The Co-operative Bank and the shares will be listed on the stock market for the first time in the bank’s history.
It plans to raise £1bn this year and £500m in 2014. The rescue deal also means The Co-op Group will not have to sell off other parts of its business to raise the money.
The “comprehensive plan” would “significantly strengthen the bank’s capital base and enable it to move forwards on a stable footing”, the society said.
“We have put in place a detailed and comprehensive solution to meet the current and longer-term capital requirements of the Bank”
Euan Sutherland, Co-op
“We have put in place a detailed and comprehensive solution to meet the current and longer-term capital requirements of the Bank,” said Co-op Group CEO Euan Sutherland.
“The Group is confident that, under the Bank’s strengthened management team, this plan offers the best way forward. We believe it is the right approach to ensure that we continue to provide great service for our 4.7 million bank customers while safe-guarding the interests of other stakeholders.”
Co-op Bank CEO Niall Booker added: “While we recognise that the short-term outlook is challenging, the measures we are announcing today mean we now have a credible plan for addressing the capital shortfall we face and can turn our attention to managing our non-core assets down and restructuring our core bank.”
The Co-op Bank pulled out of a deal to acquire 632 Lloyds Bank branches in April this year. In May, Moody’s downgraded the bank to ‘junk’ status.
Read this: Morrisons finance boss Richard Pennycook joins The Co-op
No comments yet