The Co-op Group is set to cut ties with its eponymous banking arm, after a £700 million rescue deal with its US hedge fund owners saves it from collapse.
This will see the group‘s current stake in the Co-Op Bank drop from 20 per cent to around one per cent. Although the bank will retain its name a Co-op branding, its official relationship with the mutual is over.
This is the second bailout of the bank in a decade, which saw the retailer teeter on the edge of collapse in 2013 when a £1.5 billion deficit was discovered.
READ MORE: Co-op‘s membership jumps 700,000 in just a year
2013’s collapse resulted in the group’s 100 per cent ownership of the bank being reduced to its current 20 per cent, as control was handed to the hedge funds that carried out the rescue. The group is still in the midst of a recovery.
According to the group the end of the agreement which saw the banking services promoted to the Co-op‘s members will “come to a formal end in 2020”.
The latest deal will see retail investors holding less than £100,000 in bonds get just 45p on the pound back on their initial investment, with total payout‘s capped at £13.5 million.
Click here to sign up to Retail Gazette‘s free daily email newsletter
