August 1 2014 Latest news:
Friday, May 9, 2014
The Co-operative Group’s stake in the Co-op Bank is to be reduced further it emerged today as the troubled lender unveiled details of a £400million rescue fundraising.
The mutual currently owns 30% of the bank but this will be cut because the business is not taking up all of its rights in the offer to shareholders.
The Co-op Group said it still expects to remain the bank’s single largest shareholder, although the exact size of its stake will not be known until the fundraising is complete in a few days’ time.
The bank’s four other major shareholders, who include US investment firms, are taking part in the fundraising but the Co-op is buying shares using funds raised from selling some of its £120m entitlement as it looks to keep its holding above 20%.
If the stake in the bank falls below 20%, a guarantee that it must uphold its ethical co-operative values will no longer stand, although the business could still choose to keep it.
The bank, which recently reported a loss of £1.3bn for 2013, needs the additional cash from shareholders in order to cover the cost of legacy issues, such as insurance mis-selling.
Chief executive Niall Booker said the additional funds will give the bank room to begin its turnaround plan, which will see it target retail and small business customers.
He said: “The business plan is being implemented and there have been some encouraging early signs. We have started to simplify the business, reduce costs and de-risk the non-core assets, while remaining committed to the values and ethics that continue to set us apart.”
Mr Booker also paid tribute to chairman Richard Pym, who was brought in at the height of the bank’s financial crisis and is due to leave by the end of the year.
He said: “Richard has been instrumental in the important governance changes which have been implemented at board level and his relentless appetite to bring about change and improvement has been an inspiration to us all.”