Co-op Bank drops sale plan

Co-operative Bank in Manchester

The Co-operative Bank has scrapped plans for a sale but says that talks with investors to boost capital reserves are ongoing.

The loss-making bank, which was first put up for sale at the start of the year and is 20% owned by the Manchester-based Co-operative Group, has said that it will no longer attempt a full sale.

It has said that instead it is in “advanced discussions” with investors on a prospective equity capital raise and recapitalisation.

Those hedge fund investors are Cyrus Capital Partners, GoldenTree Asset Management, Silver Point Capital, and Blue Mountain, but its pension fund liabilities remain an issue.

The bank is understood to have £800m of liabilities from the Britannia building society scheme it acquired in 2009, as well as a share of £8bn of liabilities from the Co-op Group’s scheme.

It said in a statement: “the Proposal, if implemented, would enable the bank to meet the longer term capital requirements applicable to all UK banks… and to continue as a stand-alone entity. The proposal would also safeguard the Bank’s values and ethics.”

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