Co-op Bank to slash jobs in new rescue plan
A “significant” number of jobs will be lost as the Co-operative group hands 70 per cent control of its banking arm to a group of investors.
The funerals-to-supermarkets group said owners of its bonds, including US hedge funds, will be given 70 per cent of the bank, leaving it with just 30 per cent of the lender.
The revised rescue plan aims to plug a £1.5bn black hole in the bank’s finances.
The group had initially hoped to retain control of the ethical lender by giving bond investors a minority stake in return for a £500m loss on their debt.
But bondholders, including US hedge funds Aurelius Capital Management and Silver Point Capital, will take control of the bank under the new plan, which will see it listed on the stock market in 2014.
‘Significant job losses’
The group’s chief executive Euan Sutherland told Sky News that the plan will see “significant job losses” with “thousands” set to be made redundant.
He said the bank will close around 50 of its 324 bank branches, about 15 per cent of its estate, without revealing how many jobs will go among the lender’s 9,000 staff.
The Co-op said its values and ethics will be “legally embedded” in the lender’s new rules.
Investors must now vote to back the plan, and the Co-op warned that the bank will fall into state hands through the resolution process if they do not, leaving investors empty-handed.
Ethical banks in the UK
Co-op bank
Founded 1872
Retail banking, commercial banking and independent financial advice
Comprehensive ethical policy back launched in 1992
Other: Supermarkets, funeral care, a pharmacy chain
Coventry Building Society
Founded 1884
Banking, Savings and Mortgages
Building societies are restricted by law in who they can lend to
Owned by customers and have no shareholders
Charity Bank
Founded 2002
Savings, loans to charities and social enterprise
Customers can track where money has gone by following projects on the website
Triodos Bank
Founded 1980 - Netherlands
Sustainable banking
Offers savings accounts and investments to individual customers, and full banking services to businesses and charities
Ecology Building Society
Founded 1981
Savings, Mortgages, Investments
Environment, sustainable living, making energy-efficient home improvements
Read more: banks blazing the ethical trail