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Co-op Bank gets approval for £700m rescue deal Co-op Bank gets approval for £700m rescue deal
(35 minutes later)
A £700m rescue package for the ailing Co-operative Bank was approved by its members on Monday - a major milestone for the lender that had been driven to the brink of collapse by rock-bottom interest rates and steep charges. A £700m rescue package for the ailing Co-operative Bank was approved by its members on Monday – a major milestone for the lender that had been driven to the brink of collapse by rock-bottom interest rates and steep charges.
Under the plan, big investors will swap their bond holdings for shares and parent company the Co-op will be left with a holding of just 1 per cent while five US hedge funds will take control of the rest of the bank.Under the plan, big investors will swap their bond holdings for shares and parent company the Co-op will be left with a holding of just 1 per cent while five US hedge funds will take control of the rest of the bank.
The lender on Monday said that it expects to be able to complete the restructuring and the recapitalisation by September 1. The lender on Monday said that it expects to be able to complete the restructuring and the recapitalisation by 1 September.
The deal concludes months of negotiations with creditors including BlueMountain Capital, Cyrus Capital Partners, GoldenTree Asset Management, and Silver Point Capital, and marks a major step forward for Co-op Bank, which has around four million customers. In 2013, the bank almost collapsed after the discovery of a £1.5bn black hole in its finances. The deal concludes months of negotiations with creditors including BlueMountain Capital, Cyrus Capital Partners, GoldenTree Asset Management, and Silver Point Capital, and marks a major step forward for Co-op Bank, which has around four million customers. In 2013, the bank almost collapsed after the discovery of a £1.5bn blackhole in its finances.
It put itself up for sale in February after its capital base dipped to levels deemed unacceptable by the UK’s financial regulators but it halted that process in June as plans for the restructuring were drawn up.It put itself up for sale in February after its capital base dipped to levels deemed unacceptable by the UK’s financial regulators but it halted that process in June as plans for the restructuring were drawn up.
Earlier this month the bank reported that overall losses before tax narrowed by 24 per cent to £135m in the first half of the year.Earlier this month the bank reported that overall losses before tax narrowed by 24 per cent to £135m in the first half of the year.
It said it lost around 25,000 net current account holders in the first half of 2017, or 2 per cent of its 1.4 million customers, but said that it hoped the worst was over. The bank said it lost around 25,000 net current account holders in the first half of 2017, or 2 per cent of its 1.4 million customers, but said that it hoped the worst was over.
"In the first three months of year, that flow was at a higher level and as we moved through May and June subsided and moderated significantly across that period," chief executive Liam Coleman told reporters on a call following those results. “In the first three months of year, that flow was at a higher level and as we moved through May and June subsided and moderated significantly across that period,” chief executive Liam Coleman told reporters on a call following those results.
"In terms of a relative number, we will be looking in the second half and 2018 and 2019 with our new and revised current account and switching offer to be growing market share." “In terms of a relative number, we will be looking in the second half and 2018 and 2019 with our new and revised current account and switching offer to be growing market share.”
But the bank did not rule out further headcount cuts, having cut permanent staff by 897 to 3,313 in the past year.But the bank did not rule out further headcount cuts, having cut permanent staff by 897 to 3,313 in the past year.
Additional reporting by agenciesAdditional reporting by agencies