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Britain's Co-op Bank agrees £700m rescue package

Britain's Co-op Bank agrees £700m rescue package

It said: "The board believes that the proposal will enable the bank to thrive as a stand-alone entity, with values and ethics and strong customer service continuing at the heart of its business".

The capital raising plan follows talks between the hedge funds and trustees of the £10bn Pace retirement plan, which manages the retirement savings of nearly 90,000 Co-operative Group and bank workers.

Hedge fund investors who own the bank's debt will pump 443 million pounds into recapitalising its bonds and will also help the bank raise 250 million in fresh equity, the bank said in a statement.

The pension fund will be split into sections under the same plan so that 21 percent of the assets and liabilities will be allocated to the bank, while removing the lender's obligations to support the group's commitments to former staff. Co-Op Bank will provide 100 million pounds over 10 years in deficit recovery contributions to the program, while it's also committed to provide initial collateral of 216 million pounds from the point of separation.

The Co-op Bank has agreed a £700m rescue deal with United States hedge fund investors that will see it continue as a stand-alone business.

"Unite will be meeting with the chief executive this week to seek assurances on what the deal will mean for our members in the long term, including job security assurances and pension protections".




Accepting the plan, the Bank of England's Prudential Regulation Authority said: "Supervisors will remain closely engaged with the Bank while the actions announced today are taken forward".

Trade union Unite said it "cautiously" welcomed the deal.

Co-Operative Bank has agreed to a £700m capital raising plan which means it can continue as a "viable stand-alone entity".

Under the agreement, the Co-op Consumer group's 20 per cent stake in the business will shrink to about 1 per cent.

As a result, the loss-making lender is now majority controlled by United States hedge funds.

In March, the bank, which has four million customers, said its ability to meet longer-term United Kingdom bank regulatory capital requirements has been hampered by low interest rates and higher than anticipated transformation and "conduct remediation" costs.


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