Co-op Bank up for sale

The Co-op Bank is putting itself up for sale, as low interest rates and high turnaround costs have impacted its ability to build capital.

The bank, now just 20% owned by the Co-Operative Group after it almost collapsed in 2013 and was bailed out by US hedge funds, is inviting offers to buy all of its shares.

The bank, which has four million customers, says its customer-led ethical position makes it “a strong franchise with significant potential” when it comes to a sale.

However, Co-op Bank also said it expects to report a “significant” loss for the year ending 31 December 2016.

It has said before now that it has struggled to strengthen its finances because  interest rates have remained so low for a long period of time and the costs of its turnaround plan have been higher than expected.

As well as commencing a sale process, the bank said it is also considering other options to meet its longer term capital requirements.

Dennis Holt, chairman said: “The Bank has met its Pillar 1 regulatory capital requirements continuously since 2014 and expects to continue to do so.

“At the same time, since we began work on the bank’s turnaround, the board has always been clear that we would need to build capital for the future. We are now commencing a sale process, alongside other options. The Bank’s ethical heritage and customer proposition will be a central consideration in this.”

Liam Coleman, chief executive, said: “While our plan has been impacted by lower for longer interest rates, the costs associated with the sheer scale of the transformation and the legacy issues we faced in 2013, there is considerable potential to build the bank’s retail franchise further using the strength of the brand, its reputation for strong customer service and distinctive ethical position.”

A spokesperson for the Bank of England’s Prudential Regulation Authority said: “The PRA welcomes the actions announced today by the Co-operative Bank.

“We will continue to assess the bank’s progress in building greater financial resilience over the coming months.”

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