Manchester based The Co-operative Bank has announced it is no longer for sale following advanced talks with existing investors.
The bank has reported that it is in advanced talks about a proposed equity capital raise and recapitalisation.
The loss-making Co-operative Bank is 20% owned by the Co-operative Group. It was put up for sale in February 2017 and said at the time it was examining ways to raise equity capital from existing and new capital providers.
An agreement is said to have been reached on important aspects of the proposal with current investors including Blue Mountain, Silver Point Capital, Cyrus Capital Partners and Golden Tree Asset Management.
Talks are continuing between the parties, including on other key matters, with a view to agreeing the final aspects of the proposal. It is expected that any agreed proposal would be subject to a number of conditions relating to its implementation.
Given the advanced nature of the proposal, the bank has decided to discontinue the formal sale process under the Takeover Code.
The Co-operative bank’s contact centre is housed in Stockport’s iconic Pyramid building where staff provide a range of support roles and a mortgage sales and service function.
The Co-operative Bank was rescued from near collapse by US hedge funds in 2013. The Co-operative Group now only owns a minority stake in the bank.
With branches across the UK, the bank has around £800m of liabilities following its acquisition of the Britannia Building Society in 2009.
If the proposal is accepted by the current investors, the bank would no longer be on sale and could continue as a stand-alone entity. The proposal would also safeguard the Bank’s values and ethics.
The bank markets itself as an ethical bank, and seeks to avoid investing in companies involved in certain elements of the arms trade, fossil fuel extraction, genetic engineering, animal testing and use of sweatshop labour as stated in its ethical policy. The ethical policy was introduced in 1992 and incorporated into the Bank’s constitution in 2013. In 2002, the parent company The Co-operative Group Limited brought the bank and the Co-operative Insurance Society under the control of a newly incorporated holding society, Co-operative Financial Services, which became the Co-operative Banking Group in 2011.
As Britain’s seventh biggest lender, the majority of the bank’s revenue is made from interest charges on loans.