Unity Trust Bank splits from Co-operative in major share buy-back

BIRMINGHAM-based Unity Trust Bank has separated itself from the Co-operative Bank after completing a major share buy-back.

Unity is a specialist bank for organisations and businesses that aim to create community, social or environmental benefit. It provides day-to-day banking and finance to groups including charities, social enterprise, trade unions, housing associations and councils. It also markets itself as a challenger bank for the SME business sector.

Unity, which has offices in Nine Brindleyplace, said the move was the most significant in its 30-year history.

The buy-back unlocks an £8m growth strategy that will see the bank expand on its range of services.

It has also issued new Articles of Association that combine shares into one class in order to enshrine Unity’s social purpose.

Prior to the buy-back, The Co-operative Bank owned 26.7% of Unity through its subsidiary, Co-operative Commercial. Unity has entered into an agreement with the latter whereby Co-operative Commercial has sold shares to Unity, to reduce its holding to 6.7%. The value of the buy-back has not been disclosed.

Unity is funding this from its existing resources. Its new Articles of Association redesignate all shares into a single class, all ranking pari passu, and remove the different rights of the old classes. As a result, TCB will no longer have a controlling interest in Unity or the right to appoint directors.  

Unity said the new Articles also enshrined its social purpose so that a majority of 75% of shareholders would be required to make changes.  

The bank said it had seen an increase in demand for an ethical bank from businesses and organisations with more than just a financial purpose themselves.

In order to finance its expansion, Unity has completed an £8m fundraising which has generated fresh capital from existing and new shareholders.

Unity chairman Alan Hughes said: “Today’s announcements represent the most significant changes to Unity since the bank was founded 30 years ago.  

“We are now an independent bank, with a new board, new leadership and the capacity to grow.   Our commitment to delivering a double bottom-line of both social and economic benefit is now enshrined in our constitution.  Demand for a bank with a social conscience is stronger than ever and I am delighted we have attracted additional capital to be able to meet it. “

Currently, more than 20,000 organisations bank with Unity. In 2014 its lending helped to create and protect 3,423 jobs in the UK.