August 1 2014 Latest news:
Monday, January 20, 2014
The Co-operative Group is to retain its car and home insurance division after deciding it no longer needs to sell the business.
The troubled mutual put the general insurance arm up for sale as part of plans for tackling a £1.5billion black hole in its banking arm.
But a rescue for the Co-operative Bank bank that saw investors exchange £1bn of bonds for new shares in the lender has enabled the Co-op Group to reconsider its plans.
The insurance business, which employs 1,300 people, has offices in Bury St Edmunds, Manchester, Leek, Rugby, Nottingham and Stockport.
Group chief executive Euan Sutherland said it was in the best interests of members, customers and staff that the Co-op retained and developed the business.
He said: “We received a significant amount of interest in the general insurance business, which reflects its potential.”
Potential bidders are reported to have included LV, the mutual previously known as Liverpool Victoria, which has offices in Ipswich, as well as Legal & General.
The Co-op has already completed the sale of its life and savings insurance business to Royal London as part of its contribution to the bank recapitalisation plan. Other measures such as the “strategic management” of property assets mean it no longer needs to sell the general insurance business.
The restructuring has seen the Co-op group retain a 30% stake in the bank but majority control ceded to stockholders including US hedge funds.
It now faces a raft of inquiries into what went wrong at the bank, with regulators launching formal investigations that could see former senior managers fined or banned from working in the industry.
The East of England Co-operative Society, which is based at Wherstead, near Ipswich, and operates across Suffolk, Norfolk and north Essex, is a separate organisation and is not affected by the problems at the Co-operative Group.