It was announced today that Co-op Group, current owner of Co-op Bank, will not retain control after the £1.5 billion rescue plan has been implemented.
Co-op Group had hoped that it would stay in charge but conceded this weekend, after its own rescue plan was rejected. But, the group still hopes that the bank will retain its co-operative ethos, a spokesman said.
The group had originally intended to put in £1 billion of the capital needed with the remaining amount to be provided by bondholders and owners of preference shares, a deal which has been rejected amid strong opposition from bondholders and creditors.
Instead, the bondholders' investments would be largely converted into Co-op Bank shares, effectively giving them ownership. Co-op Group will still retain a stake, just less than the 50% needed to remain in charge, with the revised deal expected to be finalised this week.
As part of the rescue, the bank's ethical and co-operative foundations are due to be written into its new guidelines going forwards, ensuring it retains those customers who choose the bank for its ethical principles.
The announcement comes amid ongoing payment protection insurance (PPI) controversy which still plagues the bank, as just this morning it revealed it was setting aside a further £100 million to compensate customers for mis-sold PPI or for errors in its lending documents.
A spokesman for the bank said: "The Bank has made a re-assessment of certain likely future conduct costs and, as a result, the Bank expects to increase its overall provisions by approximately £100-105 million.
"… these revisions [relate] primarily to a change in assumptions regarding the future costs of PPI redress, arrears charges and the processing of certain mortgage interest 'first payments'."
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