Mortgage News
Co-op completes first step of rescue plan
The Co-operative Group has moved a step closer to pulling off its Co-op Bank rescue plan after setting out a business strategy and issuing millions of shares.
In October, the Co-operative Group announced a restructure which would give it a 30% stake in the struggling Co-op Bank, with 70% given to hedge funds and other creditors.
Group chief executive Euan Sutherland said: “Today we have taken a major step forward in securing the future of The Co-operative Bank, with the support of our investors.
“In putting together this plan, we listened to all our stakeholders and worked to protect the interests of customers and members while avoiding a taxpayer bail-out. The Co-operative Group has played its part with the contribution of substantial funds, including a targeted solution to meet the needs of retail bondholders.”
The Co-op Bank has set out a strategy for a smaller, less risky bank, focused on retail customers and small and medium-sized businesses as part of a liability management exercise.
It has raised £1bn in Common Equity Tier 1, or core, capital. The bank has also issued 250m ordinary shares at five pence each.
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The Co-op Bank must raise £1.5bn before the end of the year in order to meet the Prudential Regulation Authority’s capital requirements.