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Co-op stake in bank will fall to 30% in restructure
by Michelle Abrego on Oct 21, 2013 at 14:46
The Co-op Group is to take a 30% stake in its troubled bank after renegotiating plans to plug its £1.5 billion capital hole.
Under the original restructure plans the Co-op Bank would have been part- floated, with its parent company retaining a 70% stake.
The plan has faced a backlash from bondholders, including two hedge funds who have proposed an alternative which would see the bondholders gain more control of the bank.
Euan Sutherland, Co-op group chief executive, said that the group will now retain a 30% shareholding in the bank, which will make it the biggest shareholder.
You can view the video statement from Sutherland below:
Sutherland said that the bank would be announcing further details of its new capital plan throughout the week but that it wanted to make announcement following 'speculation'.
He said: ‘We have reached an agreement in principle that saves the Co-operative Bank. This is as a result of months of work and intensive negotiations with our key stakeholders and investors.
Sutherland said the group had three aims when negotiating the new proposals:
- to avoid falling back onto the taxpayer;
- for the group to retain ‘effective control’ of the bank;
- and to build a fair and attractive deal for Co-op Bank investors
He said: ‘We will be able to announce the detail in the coming days. This bank will remain the Co-operative Bank. We are imbedding the Co-operative principles in the constitution of this bank to guarantee this. This has been a hugely difficult time for our members, for our small investors and our colleagues and our customers.’
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