UK-based Co-operative Group has revealed a new revised rescue plan for its banking unit, as part of its strategy to plug a £1.5bn ($2.4bn) capital shortfall.
Under the revised plan, the group has agreed to sell 70% stake of the bank to investors including US hedge funds, Aurelius Capital and Silver Point Capital, and will hold 30% stake in the firm.
The group will contribute £462m towards recapitalisation of the bank, whereas bond holders will swap their bonds for shares. It will also invest £125m of new capital as part of the revised plan.
The lender is also planning to close around 50 branches that represents 15% of the bank’s total 324 branches, which would result in many job losses.
Co-operative Bank said its values and ethics will be legally embedded in the bank’s new rules, allaying concerns among some customers of a transformed approach following the group’s loss of control.
Commenting on the plan, Co-operative Bank CEO Euan Sutherland was quoted by Reuters citing BBC radio as saying that what is really important to their customers and members is that the bank continues and that the values and ethics of the bank are right at the heart of that.