Co-op group look set to lose control of Co-op bank
22/10/2013
The Co-op group have confirmed that they are in talks to sell off a majority stake of the banking arm of the mutual organisation, due to the bank facing a shortfall of £1.5 billion.
The mutual organisation will still hold a 30% share in the bank, and retain ‘effective’ control, while it still holds the single largest stake. However, this ‘effective’ control is not guaranteed for the long-term future, and any major investments could potentially see the Co-op group losing control of the bank.
The potential of Co-op losing control of the company has raised some concerns that their ‘principles and ethos’ of fair and ethical trading may be lost in-lieu to profit driven investors. Originally, the Co-op group planned to avoid these possibilities by attempting to retain a majority stake of 70% in the bank, which would have seen the Co-op group investing £1 billion of it’s own assets towards plugging the £1.5 billion deficit, whilst the remaining £500 million would have been sourced through bond holders and preference shares. However, this deal was rejected by the banks creditors, which was led by a US hedge fund.
Co-op chief executive, Euan Sutherland earlier said that a deal had been struck in principle to sell 70% of the bank, but that the bank would retain its key principles. He said: "This bank will remain the Co-operative Bank," and that “we are embedding the co-operative principles in the constitution of the bank to guarantee this."
Need Advice?
If you have any financial questions, or need any advice, please contact our financial advisers who will be happy to help.
Share this..
Related stories
Do you know how much it costs to run your bank account?
Over the last few months, as profitability in UK finance sector has become harder to come by, a number of charges have been introduced to the mix, with very few hitting the financial headlines. Many financial operations, such as Halifax, have used the introduction of new European laws to amend their small print and introduce new charges and potentially expensive changes to customer agreements.
Sir Fred Goodwin's home attacked overnight
As the hate campaign towards Sir Fred Goodwin, the ex-chief executive of the Royal Bank of Scotland, continues it has been revealed that the ex-banking chief's home was vandalised overnight. A number of windows were smashed and a car was vandalised and police are currently investigating who carried out his actions. It has also been revealed that Sir Fred Goodwin's children were taken out of their...
Read MoreRoyal Bank of Scotland customers in dilemma
As Santander gets ready to bring on board up to 2 million new customers from the takeover of the Royal Bank of Scotland and NatWest high street banking outlets the BBC has reported that Royal Bank of Scotland customers can still remain with the bank if they so wish. Under the terms of the Santander takeover of the various banking outlets, Royal Bank of Scotland is not able to encourage customers t...
Read MoreIs Richard Branson targeting Northern Rock?
As we covered earlier this week, Richard Branson, via his Virgin Money subsidy, is looking to obtain a banking licence for the UK. While the company would have you believe this is just a natural progression, when you bear in mind the operation has exposure to credit cards and the like, there are many who believe this is the first step towards an acquisition of state-owned Northern Rock.
Northern Rock Ex-Management Face Possible Legal Action
In a move which will be welcomed by many investors and economists it seems as though the ex-management of the fallen Northern Rock may face legal action for their part in the run on the bank. It seems as though the present management, led by Ron Sandler, has initiated lawyers to consider whether there is some kind of case against the former directors and the way the business was run.
Read More