The Co-operative Bank is no longer up for sale as it is set to meet a rescue deal with its hedge fund investors.
The Bank, which is 20% owned by the Co-operative Group, has been looking to raise capital from existing investors and, given the advanced nature of proposals, the board has “decided to discontinue the formal sale process”.
“The Bank continues to discuss the capital raise options with the Prudential Regulation Authority,” it said in a statement, confirming it is “targeting sustainable profitability in the medium term”.
In February this year, the Bank announced it was up for sale and, in March, reported an annual loss of £477m and said it needed a capital injection of £700m-£750m.
The current proposal, if implemented, will enable the bank to meet the longer-term capital requirements applicable to all UK banks and to continue as a stand-alone entity. The deal will also safeguard its values and ethics, according to the bank.
Recently, Sky News suggested the Group’s stake could be cut to less than 5% as part of the restructure. The Group owned 100% of Bank until a crisis sparked by the takeover of Britannia led to a restructure in 2013. In May, the Group wrote down the carrying value of its stake to nil.
Discussions are still ongoing to finalise the separation of the Co-operative Pace Pension Scheme, for which both the Group and the bank have responsibility.
